Michael Bernstein, President and Chief Executive Officer of the Corporation, said:
“Bristol Water is an established, core infrastructure business with regulated and predictable inflation-linked cash flow and a strong growth profile in a stable OECD country, making it an ideal complement to our existing portfolio.”
“This is a platform investment that builds on our international footprint, diversifies our portfolio by infrastructure category, and is expected to contribute to the long-term sustainability of our dividends to shareholders. We are equally delighted to partner with AGBAR, which brings more than 140 years of experience in the water sector globally and shares our commitment to quality service, outstanding performance and efficient, environmentally responsible operations.”
SUEZ ENVIRONNEMENT, through its subsidiary AGBAR, will continue to hold a 30% interest in Bristol Water. AGBAR will continue to provide strategic counsel on trends and operational innovations within the global water services industry under an operational and management agreement.
Josep Bagué, Chief Financial Officer and General Secretary of AGBAR, added:
“We are delighted to have secured, in Capstone, a long-term partner for Bristol Water. Bristol Water has a track record of excellent operational performance and is poised for rapid expansion in the years ahead. The Capstone team brings significant infrastructure investment and management expertise, including in the water utility sector, and a strong commitment to building lasting stakeholder relationships. Capstone is an ideal fit for Bristol Water and we look forward to a long and successful partnership.”
The acquisition of Bristol Water provides Capstone with a platform investment in a new infrastructure category, positioning it to pursue additional growth opportunities in the water infrastructure sector globally.
In a statement, Capstone said that numerous North American, European and Australian pension funds and other institutional investors have emerged in recent years as significant investors in the water infrastructure sector, seeking the stable, long-term cash flow and growth potential offered by water utilities. The average annual global investment needed to repair, maintain, improve and build new water and wastewater infrastructure is estimated to be US$772 billion per year by 2015.
The acquisition has enabled the Corporation to extend its footprint in Europe and diversifies its portfolio by asset type. In 2012, Bristol Water is expected to generate approximately 18% of the Corporation’s Adjusted Funds from Operations.
The terms of the Corporation’s acquisition of Bristol Water imply a value equal to approximately 1.2 times the regulated capital value of the business and an EV/EBITDA multiple of approximately 8.2 times, comparing favourably with recent transactions in the sector. The RCV of the business as at the fiscal year ended March 31, 2011 was approximately $505 million. The enterprise value of the business was approximately $617 million as at June 30, 2011.