Coming to a boil

10 February 2003

Private equity is swooping. AWG has got one offer. Suez s Northumbrian unit is for sale. Southern Water has already gone. The boomlet is odd for several reasons not least that gearingup a water firm requires almost no equity at all.

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Germany's West LB Principal Finance said it was still interested in buying British water company AWG despite a rejection of its initial 510p per share approach, stoking M&A interest in the sector. French utility Suez has decided to put its Northumbrian unit up for sale to pay down debt, and the business is expected to attract private equity interest. Vivendi Environnement and Royal Bank of Scotland have also joined forces in a highly leveraged deal in a bid to overcome UK government objections to the French utility buying Southern Water, one of Britain's biggest water and sewage companies. Meanwhile, newspaper reports suggested that Warren Buffett's MidAmerican Energy Group had held talks last year with ScottishPower to buy the firm.

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