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Macquarie told investors he was “very proud” of his record as owner of Thames Water, the owner of Thames Water, which has been in deep financial trouble since Australian infrastructure investors sold their shares seven years ago.
Macquarie, now the majority owner of Southern Water, drew the ire of politicians and campaigners due to a decade-long ownership of Thames Water, where debt has increased dramatically and dividends are paid regularly to shareholders.
“We are actually proud of our Thames water ownership,” said Ben Wey, group head of Macquarie Asset Management, last month’s Investor Day.
He added that for the past decade “no UK regulators” have seen Australian financial groups as anything other than “very positive owners of assets.”
Thames Water’s debt rose from £3.4 billion in 2006 when Macquarie first joined the business to £1.08 billion when he sold its final shares in 2017.
“Imagine being criticized for the house you own seven years ago when the roof was leaking,” Way said.
Of Macquarie’s ownership, approximately £2.7 billion was taken out in dividends, and an additional £2.2 billion was loaned out.
However, Macquarie has previously defended the record, referring to £11 billion of customer invoices spent on infrastructure during ownership. This claims that “all water companies in the UK and Wales have the highest level of customer investment.”
It also said that Thames Water leaks fell 22% over the period, with a 75% reduction in “pollution incidents” compared to 2006.
“It was a much better business and incomplete, but after stewardship it was a much better business,” Wei said. “Thames Water is a very good example of your ability to have the courage to believe and watch beyond media drama and noise.”
Macquarie said: “Under our ownership, we have helped us realize record levels of investment and enable us to significantly improve water quality, reduce leakage and pollution incidents.
Several of Thameswater’s largest shareholders, including the Pension Fund Ontario City Employee Retirement Plan and the Abu Dhabi Sovereign Wealth Fund, rejected the value of investments in utilities last year.
Thames Water has selected KKR as the preferred bidder in a process aimed at recapitulating the group after the US private equity group submitted a £4 billion bid to acquire a majority stake in Thames Water.
Last year, Sarah Olney, a liberal Democrat from Richmond Park, said: “Under Macquarie’s ownership, Thames Water pumped millions of litres of disgusting sewage into British rivers, and then acquired billions of pounds worth of debt paid to shareholders.”
Macquarie acquired most of Southern Water, the UK’s next most suffering water company in 2021. The company is struggling with its own £6 billion debt pile and is discussing potential fees on the loan with its holding company and lenders.
In addition to the proposed haircut, Macquarie Asset Management is injecting £900 million of fresh stock into southern water.
