Macquarie injects £1.2 billion into Southern Water to rescue it

In the UK, Southern Water has recently received a significant financial boost aimed at stabilizing its finances as of early 2025. An investment firm based in Australia, Macquarie, contributed £1.2 billion, following a previous investment of £1.65 billion since 2021. The new funds began with an initial £655 million, and up to another £545 million is expected by December 2025. This step is necessary due to Southern Water's outstanding debt, which totals nearly £9 billion, making it one of the most indebted water companies in the UK, second only to Thames Water. The financial burden has resulted in credit downgrades amid concerns about meeting lending agreements. The financial umbrella provided by Macquarie includes an agreement to reduce debt owed to its holding company lenders by more than half. Previously, Southern Water faced debts estimated around £865 million, which are now being lowered to approximately £415 million. Lawrence Gosden, the company's CEO, emphasized that the entire equity raise would be allocated towards implementing the largest growth investment program in the water sector in proportion to its size, aimed at benefiting both customer service and environmental sustainability. Furthermore, the company has sought permission from regulators to raise customer charges, having previously secured a 53% increase in average bills over five years from Ofwat, the water regulator in the UK. This new appeal to the Competition and Markets Authority (CMA) aims to review the allowed increases in light of the challenges they face. Part of the further £545 million investment from Macquarie is contingent upon the CMA's ruling on this appeal. Environmental concerns have also plagued Southern Water, leading to strong scrutiny of its operations. In light of failing environmental standards, senior executives were banned from receiving bonuses for the previous financial year. This measure aligns with new rules that restrict bonus payments to water company executives unless they meet defined environmental and consumer standards, financial resilience requirements, or avoid criminal convictions, particularly critical when the company has faced severe pollution violations.