South East Water secures £200 million cash injection from foreign investors

South East Water, a key supplier for 2.2 million people across Kent, Sussex, Surrey, Hampshire, and Berkshire, has announced a £200 million cash injection to stabilise its financial position. The funding comes from its international shareholders, including Australian and Canadian funds, as well as the NatWest Pension Scheme.

The water company had previously warned of the need for new equity, having been placed on a watchlist by industry regulator Ofwat due to concerns regarding its financial health. Ofwat had rated South East Water’s business plan as adequate but noted the company’s challenges in addressing external pressures such as water security and climate change resilience.

This latest investment follows a £75 million equity injection made in December 2024, demonstrating the ongoing commitment of shareholders to supporting the financial resilience of the company. South East Water stated that the new funding would reduce its gearing, or debt-to-equity ratio, to 65 per cent, approaching the level recommended by regulators.

Ofwat’s recent price determination allowed South East Water to spend £1.8 billion on its networks between 2025 and 2030 while approving an average increase in household bills of £55 per year. Nonetheless, South East Water contested the determination with the Competition & Markets Authority, insisting the settlement did not sufficiently address its specific circumstances or broader challenges facing the sector.

A spokesperson for the company commented that these shareholder investments underscore their commitment to long-term financial stability, even as questions remain over the adequacy of the regulatory framework to support future growth and resilience in the water sector.

The financial struggles of South East Water reflect the broader challenges faced by the UK’s water industry, as companies grapple with customer demands, environmental concerns, and regulatory pressures. This cash injection could offer a temporary fix, but questions remain over the long-term sustainability of funding and operations within the sector.