Ofwat launches consultation into Bristol Water takeover
Water regulator Oftwat has launched consultation into a 70% acquisition of Bristol Water by Toronto-based Capstone Infrastructure, inviting feedback on any issues relating to the takeover.
The consultation will decide whether Capstone is the “appropriate” company to own the water utility, with the aim of deciding whether modifications should be made to the appointment. A full report of the consultation will then be issued by the regulator.
Under a share purchase agreement confirmed October 5, Capstone acquired a 70% shareholding in Bristol Water Holdings from Sociedad General de Aguas de Barcelona, S.A. (Agbar), which continues to hold a 30% share.
According to Ofwat, competition for ownership of water companies may be beneficial because it can “stimulate existing owners to become more efficient in the provision of water services”, as well as encouraging prospective owners to take advantage of “opportunities that may not have been fully exploited by the existing ownership”.
However, Ofwat adds it also has a duty to ensure the water and sewerage functions are properly carried out and must therefore be satisfied “the prospective owner has the probity and operational and financial capacity to assume that role”.
As Capstone has no conflicting material interests in any water or sewerage companies in England and Wales, Ofwat confirmed it was unlikely the deal would be referred to the Competition Commission.
In addition, Capstone will maintain the regulatory ring fence around Bristol Water and does not currently propose to make material changes to the financial or management structure of Bristol Water.
As a result, Ofwat said it does not propose to modify any financial aspects of the appointment.
Consultation is set to close January 20 2012 and can be downloaded here.
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