Southern Water has secured an offer of a equity support package totalling up to £1.2 billion from Macquarie, comprising an initial binding £655 million with up to a further £545 million intended to be committed by December 2025.

All equity raised will be invested directly into Southern Water’s operating company to fund its record network investment programme for the 2025-2030 regulatory period and maintain momentum with its turnaround plan.

In addition, certain holding company creditors have agreed to new terms as part of a refinancing that will reduce holding company debt levels, extend maturities and remove cash interest payments.

Southern Water has received a commitment from its majority shareholder to invest £655 million in additional new equity, via a consortium led by funds managed by Macquarie Asset Management. This will enable Southern Water to fund its planned investments in new infrastructure and performance improvements over the next 5 years, maintaining the urgency and pace of the company’s turnaround plan. All funding will be used for customers’ benefit and invested directly into Southern Water’s operating company.

Today’s announcement of a £655 million legally binding equity commitment is part of a broader equity investment programme which includes confirmation of intent to provide further equity commitments of up to £545 million – with a minimum of £245 million of equity commitments by December 2025, the majority of which is already supported by investors.

The additional equity investment from Macquarie Asset Management would bring the total that Macquarie-managed funds have invested in the company on behalf of long-term investors to up to £2.85 billion since September 2021.

This has already supported more than £3 billion of investment into the network during the 2020-25 regulatory period and has delivered the first phase of the company’s Turnaround Plan. No dividends have been paid to Southern Water’s external shareholders since 2017, and the company has committed that no dividends will be paid during the 2025 to 2030 regulatory period, with returns reinvested into the business to further support its record investment programme.

Between 2025–2030, Southern Water will allocate more than £8.5 billion in investment and expenditure to support growth in its region and improve services for customers, including £3.3 billion of environmental projects.

Alongside the equity commitment and working in collaboration with the Southern Water group’s creditors, the company has taken action to reduce its indebtedness and extended some of its debt maturities to improve Southern Water’s financial resilience. In particular, this will reduce Southern Water’s overall debt amount from c.£865 million to approximately c.£415 million. Together, this will create a stable platform for Southern Water to finalise raising additional new equity investment.

The company will now take the necessary steps to fulfil a number of technical conditions related to the £655 million in additional new equity. The initial £655 million equity commitment is not conditional on the outcome of the company’s ongoing appeal to the CMA, which is reviewing the Final Determination set by Ofwat in December 2024.

Lawrence Gosden, CEO of Southern Water commented:

“Southern Water has delivered on its Turnaround Plan, which is being recognised by its regulators, Government and other key stakeholders. The company is now well prepared for the 2025-30 regulatory period, and every penny of this equity raise will go directly towards delivering the largest growth investment programme in the sector relative to its size, for the benefit of our customers and the environment. This follows £1.65 billion of equity already invested by Macquarie since 2021. Taken together with the reduction in debt, and no forecast dividends for the 2025-30 regulatory period, the new investment will directly support Southern Water’s financial resilience and improving performance.

“We are grateful for the continued support of our shareholders and creditors, who recognise the progress made in our turnaround and have expressed confidence in the strength of our arguments to the CMA and the Government’s recent commitment to address the long-term attractiveness of the sector. We are focused on making continuous improvements to the service our customers expect and deserve, and we remain confident in our ability to maintain this positive momentum through to 2030 and beyond.”