A group led by JP Morgan has aquired Southern Water in a deal worth some £4.2 billion including debt - higher than City expectations.

The utility, which had been owned by Royal Bank of Scotland’s private equity arm, is one of the fastest-growing water treatment and sewage companies in Europe, with almost 500 plants. It provides services in Kent, Sussex, Hampshire and the Isle of Wight.

Weekend press reports said analysts believed that Southern Water’s enterprise value was unlikely to exceed £4bn.

The consortium buying the water giant is 32 per cent owned by JP Morgan, with UBS holding 18 per cent and the Challenger Infrastructure Fund owning 27 per cent. It will assume about £2.8bn in debt.

Analysts are likely to use the Southern Water price tag to place a value on the likes of Northumbrian Water, Yorkshire Water owner Kelda and Severn Trent.

Australian investment firm Macquarie set a benchmark for UK utilities last year when it bought Thames Water, the UK’s largest water company, in a deal that gave it an enterprise value of about £8bn. The price of the Southern Water business was driven higher in an auction that reportedly also featured a consortium led by Goldman Sachs.

Phil Peters, an executive director of the successful consortium - called Challenger - said Southern Water had the highest growth profile in the water sector.

Posted: 10|11|07 at 3:59 pm. Filed under: UK News.