Southern Water's owners before Macquarie, 1996–2021

analysisAccording to ScottishPower's annual report and Form 20-F for 2000/01, filed with the U.S. Securities and Exchange Commission, Scottish Power plc acquired Southern Water plc, the group to which Southern Water Services belonged, in 1996. As a condition of regulatory clearance ScottishPower gave assurances to the Secretary of State, and Southern Water Services' Appointment, its licence, was modified to ensure the management independence of Southern Water Services and to strengthen the ring fencing of its finances: the regulated business had to be run as if it were a separate public listed company, with a board independent of ScottishPower that included two non-executive directors. ScottishPower remained the owner until the sale completed on 23 April 2002. At the time of that sale it described Southern Water as operating in an area of about 10,450 square kilometres in south-east England, collecting wastewater from about 1.7 million premises and supplying water to about 1 million. ^{1 2}

analysisScottishPower's 2001–02 annual report, filed as an exhibit to its Form 20-F, states that the sale of Southern Water to First Aqua Limited, a company specifically formed to undertake the acquisition, was announced on 8 March 2002 and concluded on 23 April 2002. ScottishPower sold Aspen 4 Limited, the holding company of Southern Water plc, to First Aqua for a total consideration before expenses of £2.05 billion, which included the repayment and acquisition of intra-group non-trading debt and First Aqua's assumption of Southern Water's non-trading debt due to third parties. An exceptional charge of £1,187.5 million, including £738.2 million of goodwill previously written off to reserves, provided for the loss on disposal of the Southern Water business. The same report lists Southern Water Services Limited as a wholly owned principal subsidiary disposed of in the sale, and the Form 20-F exhibit list includes the sale and purchase agreement for the share capital of Aspen 4 Limited, dated 8 March 2002. ^{3 2}

analysisGreensands Holdings Limited's annual report for 2020–21 describes Southern Water Capital Limited as the previous holding company for the Southern Water group, established as part of the sale of Southern Water by ScottishPower in 2002; it does not trade and holds preference shares in Southern Water Services. The same report describes Southern Water Services Group Limited as the immediate parent of the securitised group following the financial restructuring in 2003, when Southern Water set up a whole business securitisation after its sale by ScottishPower. Greensands Holdings, which was incorporated only in 2007, appears here solely as the author of the report. ¹

analysisA different account of 2003 comes from a press report of 9 October 2007. According to that report, the Royal Bank of Scotland, together with the French environmental services company Veolia, took over Southern Water in a deal worth £2 billion in 2003; thanks to what the report called an extraordinary ownership structure, RBS then owned about 49% of the company but controlled nearly 94% of the voting rights, and the US hedge funds Perry Capital and DE Shaw were the other major shareholders. This is a press account only. ScottishPower's own report dates the sale of Southern Water, to First Aqua Limited for £2.05 billion, to 23 April 2002, and the retained records explain neither how First Aqua's 2002 purchase relates to the 2003 RBS–Veolia takeover described in the press report nor which company's shares and votes the 49% and 94% refer to. The company records do show the Royal Bank of Scotland as the owner from which the Greensands group bought Southern Water Capital, the ultimate parent, in October 2007. ^{2 1 3}

analysisThe company records name the Royal Bank of Scotland as the seller in 2007. Greensands Holdings Limited (Jersey registered number 98700) was incorporated on 28 September 2007 as the parent of Greensands Europe Limited, whose subsidiaries include Greensands Investments Limited. According to both Greensands Holdings' 2020–21 report and Southern Water's annual report for the year to 31 March 2026, the Greensands group was set up in September 2007 to buy 100% of the share capital of Southern Water Capital Limited, then Southern Water's ultimate parent, from the Royal Bank of Scotland, with £1.9 billion of equity and debt. On 15 October 2007 Greensands Holdings became the ultimate parent company of the Southern Water group, when Greensands Investments Limited acquired Southern Water Capital. The 2020–21 report adds that Greensands Holdings held 100% of the share capital of Greensands Europe and had no direct holdings in any other company. ^{1 2}

analysisThe press report of 9 October 2007 gives a price and the make-up of the buying consortium. According to it, a consortium led by the Australian company Challenger Financial Services had acquired Southern Water Capital from the Royal Bank of Scotland for £4.2 billion, a price that included about £2.8 billion of debt. Challenger Infrastructure Fund invested £300 million for a 27% equity interest; a fund advised by JPMorgan Asset Management's infrastructure investment group would invest 32%, Access Capital Advisers, for seven Australian superannuation funds, 18%, UBS 18%, Hermes Pension Management 4% and Paceweald Ltd 1%. These are the consortium shares that the press reported as agreed at the time of the deal. The company records give neither the 2007 percentages nor the £4.2 billion price; they state that the Greensands group invested £1.9 billion of equity and debt to finance the acquisition, and that the purchase completed on 15 October 2007, when Greensands Holdings became the ultimate parent through Greensands Investments' acquisition of Southern Water Capital. ^{3 1}

analysisGreensands Holdings was registered in Jersey but resident in the UK for tax. Its 2020–21 report says that it was incorporated in Jersey because Jersey law allows greater choice than the UK as to the way distributions can be made to shareholders. Southern Water's annual report for the year to 31 March 2026 states that no interest or dividends were paid to the investors in Greensands Holdings before the change in ownership structure on 4 July 2025, and that Greensands Holdings, Greensands Europe Limited, Greensands (UK) Limited and Southern Water (Greensands) Financing plc, previous members of the group, are in the process of being closed and dissolved. ^{1 2}

analysisBefore the Macquarie transaction, Greensands Holdings' annual report for the year to 31 March 2021 describes the company as owned by a consortium of long-term investors — infrastructure investment funds, pension funds and private equity — with no single shareholder holding majority control. It names a shareholding advised by UBS Asset Management; IIF Int'l SW UK ParentCo Ltd, part of the Infrastructure Investments Fund advised by J.P. Morgan Asset Management; a shareholding managed by Whitehelm Capital for the Motor Trades Association of Australia and Prime superannuation funds; Hermes Infrastructure funds; and other minor holdings of infrastructure investment companies. The notes to the accounts state that at 31 March 2021 no single investor owned a controlling shareholding. ²

analysisAccording to the same report, the board of Greensands Holdings had five directors: three appointed by an infrastructure fund managed by JP Morgan Asset Management, one by infrastructure funds managed by UBS Asset Management and one by pension and infrastructure funds managed by Hermes; another shareholder could appoint an observer who could not vote. The chairman of Southern Water was not a member, and no director of Greensands Holdings was also a director of Southern Water Services Limited. To comply with Condition P of Southern Water's licence, the report states, the shareholders considered to be the Joint Ultimate Controllers of Southern Water had given undertakings to provide all necessary information to the company, not to cause it to breach its obligations and to ensure that there were not fewer than three independent non-executive directors on the Southern Water board. ²

analysisBesides their shares, the investors held notes issued within the group. Greensands Europe Limited issued notes, called Eurobonds, with an aggregate principal of £359,725,975 to the shareholders of Greensands Holdings, in proportion to their shareholdings. The notes carried interest at 12% a year, compounded if unpaid, and were repayable on 31 March 2038; a payment-in-kind exercise in 2016 capitalised £489,788,024 of accrued interest. At 31 March 2021 the shareholder Eurobonds totalled £1,569.6 million, including £720.1 million of accrued interest, and Eurobond interest payable to related parties for the year to 31 March 2021 was £168.2 million (previous year: £150.5 million). The largest listed holding was IIF Int'l SW UK Investment Ltd's £278.3 million of Eurobond principal; other holders included Phildrew Nominees Ltd for UBS funds, Hermes Infrastructure Fund partnerships, National Nominees Ltd for the Motor Trades Association of Australia Super Fund and Prime Super, and the Falkirk Council and Lothian pension funds. On 11 June 2021 the holders transferred the Eurobonds to Greensands Holdings in exchange for new shares, which did not change the percentage of shares held by each group of shareholders. ¹

analysisReading the 2007 press report together with Greensands Holdings' 2020–21 report, this dossier infers that three of the 2007 consortium investors appear to have continued as shareholders until the 2021 Macquarie transaction: the fund advised by JPMorgan Asset Management (32% in 2007; in 2021 IIF Int'l SW UK ParentCo Ltd, part of the Infrastructure Investments Fund advised by J.P. Morgan Asset Management), UBS (18% in 2007; in 2021 a shareholding advised by UBS Asset Management) and Hermes Pension Management (4% in 2007; in 2021 Hermes Infrastructure funds, part of Federated Hermes International, formerly Hermes Investment Management). This is an inference, not a register entry: it rests on the investors' names and on the continuity of the Greensands group since 2007, and no record ties the 2007 investors and the 2021 shareholders together by registration number. Ownership by a consortium without a controlling party ended on 8 September 2021, when Macquarie Asset Management, through MSCIF Wight Bidco Limited, acquired a 62.24% majority stake in Greensands Holdings under an agreement with the existing shareholders; that purchase is described on the page on Macquarie's control. ^{1 2 3}