Macquarie Injects Fresh £1.2 Billion Pound Lifeline into Troubled Southern Water

Australian finance powerhouse Macquarie has orchestrated yet another substantial bailout of Southern Water, pushing their total investment to a staggering £2.85 billion over four years. The latest rescue package arrives as creditors agree to write off more than half their lending exposure to the struggling utility provider.

Macquarie Asset Management, previously known for its controversial ownership of Thames Water, has committed to injecting up to £1.2 billion to support Southern through its current five-year spending cycle. The immediate cash injection amounts to £655 million, supplementing their previous £1.65 billion investment, with an additional £255 million scheduled for release by year-end.

The rescue operation includes a potential £300 million future investment, contingent upon Southern Water’s ongoing appeal with the Competition and Markets Authority. The utility provider had initially sought an unprecedented 83% increase in household bills, which would have raised average annual charges to £768 by 2025. Ofwat’s final determination permitted a more modest 53% increase, prompting Southern’s appeal for a more favourable settlement.

Southern Water’s financial restructuring extends beyond fresh capital. Creditors have agreed to reduce their debt exposure from £865 million to £415 million, extending maturities to 2030. The company aims to reduce its gearing to 70%, seeking to regain investment-grade status for its currently junk-rated bonds.

Lawrence Gosden, Southern’s chief executive, emphasised that the new investment would support “the largest growth investment programme in the sector relative to its size.” The utility provider, serving 4.7 million customers across Kent, Sussex, Hampshire and the Isle of Wight, has committed £8.5 billion to business improvements, with £3.3 billion earmarked for environmental projects.

Despite persistent criticism over its role in the Thames Water crisis, Macquarie continues to expand its UK infrastructure portfolio, recently acquiring stakes in Bristol, Birmingham, and London City airports. The firm claims to have invested £60 billion in UK infrastructure since 1999, with plans for an additional £20 billion investment across various sectors.