Ofwat has concluded that no further steps need to be taken in relation to the change of ownership of Icosa Water Services Limited, following a consultation launched by the regulator in February this year.
The consultation followed the acquisition of 50% of the shares in Last Mile Infrastructure Group Limited, the ultimate holding entity of Icosa Water Services Limited by Macquarie European Infrastructure Fund 7 (MEIF7) via its subsidiary Connex Holdco Limited UK. Icosa Water is a regulated water and wastewater provider, established to offer new development residents with water and sewerage services.
Based on its assessment of the incoming shareholders, the regulator said no additional modifications to Icosa Water Services licence were required as a direct result of the change in ownership and that both Macquarie European Infrastructure Fund 7 (MEIF7) and Connex Holdco Limited UK, are Ultimate Controllers of Icosa Water Services Limited.
Ofwat only received one response to the consultation, from United Utilities Water Limited. In its response United Utilities Water Limited raised questions regarding when it is acceptable for such arrangements to be put in place when the incumbent has an associated relationship with a NAV operator.
In its finding, Ofwat said:
“In terms of any risks posed by Icosa Water Services operating within the same corporate group as Southern Water, our assessment of the change of ownership of Icosa Water Services ascertained that the new owners, Macquarie European Infrastructure Fund 7 (“MEIF7″) are part of a division within the Macquarie Group (MGL) which operates independently from the division that holds the investment in Southern Water Limited.”
Macquarie Group (MGL) informed Ofwat that it operates strict information barriers between its different divisions, including the physical separation of teams and access to online systems. In addition, Ofwat said the licences of both Icosa Water Services and Southern Water contain safeguards to ensure every transaction between the appointed business and any associated company is at arm’s length, so that neither the Appointed Business nor the Associated Company gives a cross-subsidy to the other, and prohibitions on giving any guarantee or loan to an Associated Company without Ofwat’s prior consent.
