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Macquarie buys Thames Water

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WATER INDUSTRY insiders have welcomed the ú8bn ($15.2bn) acquisition of the UK's Thames Water by a consortium led by Australian investment group Macquarie Bank.

Kemble Water paid $9bn for the water company, which was valued by regulator Ofwat at $11.5bn. Kemble has taken on $6bn of debt, making the deal worth $15bn to the former owner, German company RWE.

Experts welcomed the experience that Macquarie would bring as owner. It runs airports and roads worldwide, including the M6 Toll in England.

Until recently it was owner of South East Water, which it sold to fellow Australian group Westpac for $1.2bn earlier this year. Others warned that Ofwat must ensure that Thames Water's investment plans are protected.

'The way the regulator thinks is going to be critical ? clearly they must put in place additional ring-fencing of funds, ' an insider said.

The Consumer Council for Water said that it hoped the new owner would make more investment and serve customers better than RWE had.

Macquarie beat off competition from other bidders ? including the Australian group Alinta and the Qatar Investment Authority ? with the help of the departing chief executive of contractor Amec Sir Peter Mason, who is now expected to be handed a role at Macquarie.

The losing bidders are expected to turn their attention to other UK water companies with Severn Trent, South West Water, Northumbrian Water and AWG all reported to be in the frame for potential takeover bids.

'Water companies are attractive in the current climate due to low inflation and the availability of funds and steady if moderate returns over a long period of time, ' said one observer.

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