Southern Water: Bank buys majority stake in water firm after record fine

An investment bank has bought a majority stake in Southern Water, four weeks after it was fined a record £90m for dumping raw sewage into the sea.

Macquarie Group said the company's past failings had been "unacceptable" and promised to reduce pollution.

Southern Water deliberately dumped billions of litres of sewage into rivers and seas between 2010 and 2015 to save money, a judge ruled.

As part of the £1bn acquisition, £230m will be spent upgrading infrastructure.

The company was fined after admitting to 6,971 illegal spills from 17 sites in Hampshire, Kent and West Sussex.

Details of Southern Water's offences had been "distressing to read," the Australian firm said in a letter to regulator Ofwat.

While a further investigation is ongoing by the Environment Agency, Southern Water's new leadership had shown "remorse" and were committed to improving, it said.

The criminal case followed a £126m penalty imposed on Southern Water in 2019 as a result of the company's regulatory failings over the same period.

Macquarie said it would strengthen "a zero-tolerance mindset to environmental pollution" and improve the track record of Southern Water, which is "one of the worst performing in the UK water sector".

Ofwat said it welcomed the investment from Macquarie, which it said had recognised that Southern Water's current performance was "not good enough".

"We need to see significant progress in this regard," it said.

"A step-change in approach and performance is required if Southern Water is to fundamentally change the way it delivers on the expectations of customers and in how it protects the environment."

Macquarie Asset Management Group, acting on behalf of investors including pension funds and insurance companies, acquired a majority stake in Southern Water's parent company Greensands Holdings for more than £1bn.

Southern Water said the acquisition means it would ensure it could spend £2bn over the next four years to cut spills and leaks.

Chair Keith Lough said it would allow the company to "increase investment in our network and accelerate the transformation plans we have put in place".

Follow BBC South East on Facebook, on Twitter, and on Instagram. Send your story ideas to [email protected].