Pounds 400m US Splash Lands South Staffs Water; UTILITIES

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Byline: By Duncan Tift Business Staff

Midland utility South Staffordshire Water has been sold in a deal worth around pounds 400 million.

There had been speculation late last week that a deal was in the offing although the destination of the company was uncertain.

The speculation ended yesterday when Arcapita Bank, which acquired the Walsallbased business in 2004, announced it had sold the water company to the Alinda Infrastructure Fund, a pounds 1.5 billion institutional fund managed by New York-based Alinda Capital Partners.

The sale price has not been publicly disclosed, but South Staffordshire's evaluated price was pounds 400 million before the acquisition and a source close to the deal yesterday said that Alinda's offer was near to this.

The deal nets Arcapita Bank a tidy profit, it having acquired the utility - which supplies 1.25 million customers in the region - in November 2004 for pounds 245 million.

Since acquiring the business, Arcapita had worked closely with South Staffordshire's management team to build the company.

Arcapita said this strategy was reflected in the growth of the three non-regulated businesses.

Echo provides outsourced customer contact management and billing activities for a number of water utility customers and develops and implements customer contact and billing software for the UK water industry.

Water & Wastewater Services provides a range of specialist water and sewerage infrastructure maintenance services to the UK water sector and other owners of water related infrastructure.

The third business, Aqua Direct, is a natural spring and mineral water business.

Arcapita's European head of asset-based investment Qaisar Zaman said: "We have been very pleased to have owned South Staffordshire and to have contributed to its growth.

"We are particularly proud of the high levels of service and quality it has achieved. It is one of the best performing water companies in the UK with one of the lowest household bills for customers."

Alinda's managing partner Chris Beale said the utility was an excellent strategic fit for the business.

"South Staffordshire is a well established business with an outstanding operating history, a reputation for customer excellence, a strong management team and dedicated employees," he said. …