Macquarie : reaches agreement to sell its final stake in Thames Water to institutional infrastructure investors

London, 14 Mar 2017

Macquarie today announced that Macquarie European Infrastructure Fund 2 (MEIF2), together with two other Macquarie-managed funds, have agreed to sell a combined 26.3 per cent interest (the Sale Interest) in Kemble Water Holdings Limited (Kemble), the ultimate holding company of Thames Water Utilities Limited (Thames Water). MEIF2 is managed by the Macquarie Infrastructure and Real Assets (MIRA) division of Macquarie.

The Sale Interest is being acquired by Borealis Infrastructure, the infrastructure investment manager of OMERS, and Wren House Infrastructure Management Limited, the infrastructure investing arm of the Kuwait Investment Authority. MEIF2, which holds the majority of the Sale Interest, is divesting its stake as the fund is approaching maturity. The Sale Interest is the final divestment by Macquarie of its stakes in the business.

Over the 11 year period in which Macquarie-managed funds have held interests in Thames Water, the business has successfully delivered an ambitious capital investment programme of over £11 billion to maintain, update and expand its network, equivalent to £1.0 billion per annum on average. This average investment is over 200% higher than the five year period before privatisation in 1989 and 72% more than the period after privatisation until MIRA first invested in Thames Water in 2006.

Despite this very significant investment in the network, Thames Water customers still pay the third lowest charges for water and sewerage services in England and Wales.

Through investment and a refocusing of the Thames Water business on its core London and Thames Valley water and waste management operations, significant operational improvements have been made, including:

• A significant reduction in the level of leakage, with the network losing 25% less water than it did in 2006
• Water quality consistently maintained among the best in the industry
• Significant improvement in the security of water supply for the Thames Water region
• Substantial expansion to the waste treatment capacity of the network, including major improvements at each of the five large sewage works serving London
• Extensive green investment, including increased generation of renewable energy from waste and the creation of one of the largest floating solar panel schemes in the world
• Delivery of the Lee Tunnel, the largest capital project in the UK's privatised water industry, as well as securing delivery of the Thames Tideway Tunnel project, which will transform the health of the River Thames and will be delivered by a separate, regulated utilities business.

Martin Stanley, Global Head of MIRA said 'We feel privileged to have been associated with Thames Water for such a long period of time and are pleased to have significantly increased investment levels and improved operational performance. Today, Thames Water is undoubtedly a better, stronger and more customer focused business than that which we invested in back in 2006. We wish the new shareholders well in continuing on this journey to improve the business, delivering a strong and improving network to keep pace with the demands of serving a dynamic and growing region.'

Nomura and Macquarie Capital advised the sellers.

Contact

Steve McCool
Corporate Communications, Macquarie Infrastructure and Real Assets
Tel: +44 20 3037 4411
Email: steve.mccool@macquarie.com

About Macquarie Infrastructure and Real Assets (MIRA)

MIRA is part of Macquarie Asset Management Group, the asset management arm of Macquarie Group, a diversified financial group providing clients with asset management, banking, advisory and risk and capital solutions across debt, equity and commodities. Founded in 1969, Macquarie Group employs more than 13,800 people* in 27 countries* and has assets under management of GBP291.4 billion*.

MIRA pioneered infrastructure as a new asset class for institutional investors. For more than 20 years it has been investing in and managing the assets that people use every day - extending beyond Infrastructure to Real Estate, Agriculture and Energy. MIRA's dedicated operational and financial experts work where MIRA's funds invest and the portfolio companies operate. They are part of a global team which helps clients to see across the regions and deep into local markets.

MIRA has assets under management of more than GBP80.4 billion invested in 129 portfolio businesses, ~300 properties and 4.5m hectares of farmland*.

*at 30th September 2016