Southern Water

Parent company: Southern Water Investments 80%, Vivendi Environnment 20%

Regulated utility: Southern Water Services Ltd

Southern Water has had a chequered ownership history. Following privatization it diversified unsuccessfully into a number of business areas. Then in the mid nineties the company was bought by Scottish Power. They refocused the company back into its core business of water and wastewater treatment and sold off all the other interests.

Subsequently Scottish Power ran into problems in the USA and needed to reduce its debt. It therefore decided to sell Southern Water to a venture capital company specially set up for the purpose called First Aqua. The intention was that First Aqua would almost immediately sell the company to Vivendi Environmental. Problems arose when the Competition Commission blocked the sale to Vivendi.

After a year of discussion a solution appears to have been reached. A new company called Southern Water Investments Ltd (SWI) has been formed to take over ownership of Southern Water. SWI will acquire First Aqua and hence ownership of Southern Water. The ownership of SWI is 80.1% with Southern Water Capital and 19.9% with Vivendi Environment (Veolia Environnement)

Southern Water Capital is owned 49% by the Royal Bank of Scotland with the remainder held by institutional investors. This new structure enables Vivendi to gain a shareholding in Southern Water and increase its investment in the regulated UK water market. It also ensures that Southern Water has a sustainable ownership structure. It will allow continued management by the existing executive management team.

Southern Water still has a regional management structure but responsibility for delivering its massive capital programme has been let to two consultant/contractor Joint Ventures. Most of the investment in new large coastal sewage treatment works is nearing completion with the major exception of Brighton where there have been huge planning problems.