APAC: Mitsubishi UFJ Lease buys UK water stake

04 July 2018 - 12:00 am UTC

Mitsubishi UFJ Lease & Finance has agreed to acquire a 19.9% stake in South Staffordshire Plc from Arjun Infrastructure Partners it said on Wednesday (4 July).

A spokesperson declined to comment on reports that the transaction is valued at slightly more than JPY 10bn (USD 90.3m). 

Arjun agreed to acquire KKR Infrastructure’s 75% stake in the UK-based water supply company in April. The sale to Mitsubishi UFJ Lease (MUL) reduces its stake to 55.1%.

Japanese trading house Mitsubishi Corp earlier acquired a 25% stake from KKR, in February 2016. Mitsubishi Corp is MUL’s largest shareholder.

The deal marks MUL’s first investment in a water supply business outside Japan.

MUL said it aims to expand business opportunities in social infrastructure both at home and overseas by leveraging experience and know-how from South Staffs Water, the regulated water company owned by South Staffordshire. The statement highlighted that the UK’s regulated water sector is considered the world’s most advanced privatization model.

Japan’s parliament is now deliberating a bill which is indispensable to proceed with the launch of water concessions in Japan.

South Staffs Water serves 1.6m customers in South Staffordshire and Cambridge the MUL statement said. It manages assets including 56 water intakes, 26 water treatment plants, 81 pumping facilities and 9,100km extended length of network pipes. Unlike most water companies, a large part of South Staffs’ revenue and profit is from unregulated activities, which are not used to calculate Regulated Asset Value, of GBP 347.6m (USD 457.7m) in the company’s last full year results. 

South Staffs reported adjusted Ebitda of GBP 81.9m (USD 107.9m) for the year ended 31 March 2017, down slightly from GBP 82m the previous year on revenue up to GBP 248m from GBP 234.9m.

Mitsubishi UFJ