Macquarie has today announced that Macquarie European Infrastructure Fund 2 (MEIF2), together with two other Macquarie-managed funds, have agreed to sell a combined 26.3 per cent interest in Kemble Water Holdings Ltd, the ultimate holding company of Thames Water Utilities Ltd.

MEIF2 is managed by the Macquarie Infrastructure and Real Assets (MIRA) division of Macquarie.

The Sale Interest is being acquired by Borealis Infrastructure, the infrastructure investment manager of OMERS, and Wren House Infrastructure Management Ltd, the infrastructure investing arm of the Kuwait Investment Authority. MEIF2, which holds the majority of the Sale Interest, is divesting its stake as the fund is approaching maturity. The Sale Interest is the final divestment by Macquarie of its stakes in the business.

Over the 11 year period in which Macquarie-managed funds have held interests in Thames Water, the business has delivered a capital investment programme of over £11 billion to maintain, update and expand its network, equivalent to £1.0 billion per annum on average.

The average investment is over 200% higher than the five year period before privatisation in 1989 and 72% more than the period after privatisation until MIRA first invested in Thames Water in 2006.

Maquarie said that through investment and a refocusing of the Thames Water business on its core London and Thames Valley water and waste management operations, significant operational improvements had been made, including:

• A significant reduction in the level of leakage, with the network losing 25% less water than it did in 2006
• Water quality consistently maintained among the best in the industry
• Significant improvement in the security of water supply for the Thames Water region
• Substantial expansion to the waste treatment capacity of the network, including major improvements at each of the five large sewage works serving London
• Extensive green investment, including increased generation of renewable energy from waste and the creation of one of the largest floating solar panel schemes in the world
• Delivery of the Lee Tunnel, the largest capital project in the UK's privatised water industry, as well as securing delivery of the Thames Tideway Tunnel project

Martin Stanley, Global Head of MIRA commented:

"We feel privileged to have been associated with Thames Water for such a long period of time and are pleased to have significantly increased investment levels and improved operational performance. Today, Thames Water is undoubtedly a better, stronger and more customer focused business than that which we invested in back in 2006. We wish the new shareholders well in continuing on this journey to improve the business, delivering a strong and improving network to keep pace with the demands of serving a dynamic and growing region”.

The new consortium consists of international infrastructure investors with proven track records of investing in UK critical infrastructure - current investments include London City Airport, Associated British Ports, SGN, Belfast International Airport and High Speed 1.

Outside the UK, the Consortium Members have additional significant experience as investors in major regulated utilities in Canada, the USA, Australia, Spain, Sweden, Finland and Czechia

Both Borealis and Wren House said they are committed to the responsible, long-term ownership and development of Thames Water. The Consortium has already met with Thames Water’s existing management team and say they look forward to working closely with them to pursue this goal. 

Nomura and Macquarie Capital advised the sellers. Financial details of the transaction have not been disclosed.