Ofwat has launched a new consultation on its draft decision that there is no need to introduce additional protections in Northumbrian Water’s licence directly as a result of the recent change in ownership which has seen US investor KKR & Co Inc take a 25% stake in the business.
Ofwat has launched a new consultation on its draft decision that there is no need to introduce additional protections in Northumbrian Water’s licence directly as a result of the recent change in ownership which has seen US investor KKR & Co Inc take a 25% stake in the business.
In July 2022, CK Hutchinson Holdings Ltd and CK Asset Holding Ltd entered into an agreement with Kohlberg Kravis Roberts (KKR & Co Inc.) to collectively sell 25% of their shares of Northumbrian Water Group Limited, the holding company of Northumbrian Water. The transaction completed in December 2022.
The water sector regulator has published a consultation paper setting out an overview of the changes to the ownership of Northumbrian Water and assessing the capacity of its new investor to be the owner of a regulated water company.
Ofwat said that to assess the new owner of Northumbrian Water it reviewed information received from Northumbrian Water and its new investor, (KKR & Co Inc). In addition, it has separately carried out its own investigations into the new corporate structure using publicly available information
KKR & Co Inc, which is listed on the New York Stock Exchange (NYSE), is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. In the third quarter of 2022, the company reported that it had $496 billion of assets under management. The company has previous experience of investing in the UK water sector - for the period 2013 to July 2018 it owned 75% of the shares in South Staffordshire Water PLC.
KKR Diversified Core Infrastructure Fund is an infrastructure core fund located in New York and managed by KKR & Co Inc. The fund invests in Western Europe and North America,.
Nimbus UK Bidco Ltd, which is registered in the UK, was formed in March 2022 to facilitate the acquisition of the 25% investment in Northumbrian Water Group Limited and holds the shares.
As of March 2022, KKR & Co Inc is shown as the sole entity with significant influence or control over Nimbus UK Bidco Limited.
As the company was only formed in March 2022, Nimbus UK Bidco Limited, has no financial history, its first set of annual accounts are not due until March 2023. The company's ultimate shareholder is KKR & Co Inc, registered on the New York Stock Exchange.
Ofwat states in the consultation paper:
“KKR & Co Inc has stated that it has no direct or indirect equity interest in any other water undertakers or water supply licensees in England and Wales, therefore KKR & Co Inc does not believe that there is any actual or potential conflict of interest. From our own investigation, we are not aware of, and have not identified, any potential conflicts of interest.”
Ofwat said its change of control assessment has considered the ownership, operational activities and financial standing of the new investors in Northumbrian Water and had not identified any issues, based on the information it has received and considered to date. “Therefore, we do not see a need to introduce additional protections in the licence directly as a result of the change in ownership”, the consultation paper states..
Deadline to submit comments on the water sector regulator’s consultation paper is 3rd July 2023 – click here to download the document in full.
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