Backer of Yorkshire Water owner eyes £500m exit as industry troubles continue

A part owner of one of the UK’s biggest water suppliers is considering an exit as the sector comes under increasing scrutiny.

US-based investment house Corsair is reportedly seeking a buyer for its 30 per cent stake in Kelda, the owner of Yorkshire Water, The Sunday Times has reported.

The company is reportedly looking for between £300 and 500m for the stake.

Kelda was forced to pump half a billion pounds into the business in June, soon after it had generated £200m from capital markets and around £500m in February this year from bondholders.

Alongside Corsair, the firm’s shareholders include Singapore’s sovereign wealth fund GIC and German asset manager DWS.

Corsair, Kelda and Yorkshire Water were all contacted for comment about the report.

Last month, Yorkshire Water, which serves 2.3m households and 130,000 businesses, was hit with a demand to return £19.8m as part of a customer refund programme across the UK’s utilities suppliers.

Thames Water, which supplies around 15m people across the South East, however, has led the industry in terms of bad publicity for the sector in recent months.

Following an enforced £72.3m refund to customers, it was revealed that the firm will likely face a parliamentary inquiry over accusations it portrayed funding from its parent company Kemble Water Holdings as new money.

Its auditors PwC also warned that the company could go bankrupt by April if it cannot refinance a £190m loan held by one of its subsidiary businesses.

In its recent financial results, which noted a debt pile of £14.7bn, company bosses Cathryn Ross and Alastair Cochran said: “Turning around Thames will take time. We simply cannot do everything that our customers and stakeholders wish to see at a pace and for a price that everyone would like.”