Veolia sells regulated water business
French water business Veolia Environnement has sold a majority stake in its UK regulated water businesses for £1.2bn to help reduce debt.
Veolia Water Central, East and Southeast have been bought by Rift Acquisitions, an acquisition entity formed by Infracapital Partners, an infrastructure investment fund managed by M&G (the European investment arm of Prudential) and Morgan Stanley Infrastructure Partners.
Veolia is leveraging a series of asset sales to help restore the firm's profitability since unearthing an multimillion dollar accounting fraud in the US and substantial write-offs last year. The £4bn divestiture was announced to investors in December 2011.
The group has retained its Veolia Water Outsourcing business, a provider of outsourced services to the UK water industry, which has an annual turnover of £400m.
Olivier Bret, Veolia Water's chief executive, said, "The sale will reduce the capital intensity of the group and in doing so create a platform that will allow the company to wholly focus on its commercial outsourcing business and continue to provide a valued service to our clients and partners.
"The UK water sector is a strategically important market for Veolia Environnement and the group is committed to continuing the growth of Veolia Water and the Veolia Water Solutions & Technologies division in the UK."
Antoine Frerot, chairman and chief executive of Veolia Environnement, added: "This first significant divestment shows that we are moving in the right direction regarding the implementation of our strategic plan and that the transformation of Veolia is progressing at a good pace."
As part of the sale, Veolia Water has retained a 10% shareholding and has established an exchange agreement to ensure sharing of best practices and continued access to previously developed capabilities.