A consortium led by JPMorgan Chase & Co has agreed to buy UK water company Southern Water from Royal Bank of Scotland for about 1.3 billion pounds ($2.7 billion).
The financial services group partnered with Sydney-based Challenger Infrastructure and other funds to buy the company which provides water to more than 2 million people in southern England.
The consortium will pay 1.13 billion pounds ($2.26 billion) and assume the firm's debt, valuing the company at 4.2 billion pounds.
Finance package
JPMorgan will pay 360 million pounds for a 32 percent stake in Southern Water and Challenger 300 million pounds for 27 percent.
Additional stakeholders include UBS AG, Hermes and private firm Paceweald Ltd.
The finance package also includes the potential to syndicate 156 million pounds of equity in the next 12 months.
Water companies and other utilities are attractive to investors such as pension funds because of their stable, secure cash flows.
Sydney-based Challenger was advised by Australia's Macquarie Bank Ltd which last year bought Britain's Thames Water for 8 billion pounds.
Royal Bank of Scotland, which bought a controlling stake in Southern Water in 2003, put the firm up for sale earlier this year.
According to sources Morgan beat a rival group led by Goldman Sachs to the deal.
October 9 2007
Related Links
Southern Water
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