Utility Week

UTILITY Week 26th June 2015

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UTILITY WEEK | 26TH JUNE - 2ND JULY 2015 | 17 Finance & Investment Stock watch 2250 2200 2150 2100 2050 SEVERN TRENT SHARE PRICE, APRIL - JUNE 1020 1000 980 960 940 920 UNITED UTILITIES SHARE PRICE, APRIL - JUNE Apr Apr May May Jun Jun Severn Trent and United Utilities shares were boosted over the weekend after "early talks" between Canadian pension fund Borealis and Severn Trent about a potential takeover. Severn Trent's share price leapt by 57 to 2,115pps by the start of trading on Monday morning, and opened at 2,171pp on Tuesday. UU's price went from 954pps at the end of play on Friday to 967pps by Monday morning, and 989.50 on Tuesday morning. This week Borealis makes bid to enter UK water sector Canadian pension fund in 'early discussions' with Severn Trent about possible £5bn deal Canadian pension fund Borealis is seeking to enter the UK water sector, reviving takeover talks with Severn Trent and aiming to take ownership of the Thames Tideway Tunnel project. The investment giant is reportedly in "early discus- sions" with Severn Trent about a buyout, refreshing the interest it showed two years ago when it was part of the LongRiver consortium that failed to complete the takeover. The discussions are said to have started last month over a potential deal worth at least £5 billion. Whitman Howard utilities analyst Angelos Anasta- siou said "such a deal remains feasible", adding that a "realistic" takeover bid would value Severn Trent shares at 2,400p, and the company at £5.6 billion. Two years ago, the Severn Trent board rejected three offers from the LongRiver consortium, turning down a £5.3 billion bid in June 2013. Borealis is also said to be one of two companies competing to become the preferred bidder to finance and build the £4.2 billion Thames Tideway Tunnel. A consortium that includes insurance firm Allianz, fund manager Dalmore Capital, Amber Infrastructure, and the Dutch DIF fund is the rival bidder, and the two bids have been described as "too close to call". The deadline by which one of the bidders will be named has been extended by a month, giving both until the middle of next month to submit their final offers. A spokesperson from Thames Tideway Tunnel said the company would "not comment on speculation". MB WATER Surplus at Scottish Water rises to £111m Scottish Water has recorded an increased pre-tax surplus of £110.7 million in its end-of- year results, up £9.7 million on 2013/14 for the publicly owned water company. The company also posted a regulated surplus of £77.1 mil- lion for 2014/15, up £17.1 million. This allowed the company to invest a total of £470 million, bringing the total invested in 2010-15 to £2.4 billion. For the next regulatory period (2015-21), Scottish Water has lined up a £5.3 billion invest- ment programme. Revenue from household services increased by £21.9 mil- lion to £800.8 million, reflecting a 1.6 per cent tariff increase from 1 April 2014, and an increase in the number of connected properties. Revenue from wholesale ser- vices fell £4.4 million to £289.2 million, reflecting the planned reduction in wholesale tariffs. ENERGY Next Energy acquires solar farms for £22m Next Energy Solar Fund has acquired two UK solar farms in deals worth a combined £22 mil- lion as it embarks to expand its generation capacity. The fund has purchased the Bowerhouse solar power plant in Somerset – with a nominal output of 9.3MW – for up to £11.1 million, which will be completed upon receipt of a pre- liminary acceptance certificate, and the 8.5MW Wellingborough solar power plant in Northamp- tonshire for £10.9 million. The two solar farms are eligible for 1.4 and 1.6 Renewable Obligation Certificates respectively. The deals bring Next Energy Solar Fund's portfolio up to a total of 18 assets with a com- bined capacity of 234.5MW. ENERGY Up to £2m to make a business case for CCS The Energy Technologies Insti- tute (ETI) is offering up to £2 million to support the develop- ment of the business case for a phase two carbon capture and storage (CCS) project. The money will be available to projects that identify the technical and commercial foun- dations and create a business case for the CCS plant, including identifying a vehicle to take the project forward to a final invest- ment decision. The ETI wants the project to plug into the CCS network that will be developed for the phase one projects – Peterhead in Scotland and White Rose in Yorkshire – and "deliver momen- tum into the next phase of CCS sector development". Analysts say a Severn Trent deal is 'feasible'

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