Utility Week

6 | 1ST - 7TH JULY 2016 | UTILITY WEEK People & Opinion Our ambition for growth is no secret For now, Business Stream's focus is integrating its new customers, but it doesn't rule out further acquisitions. Question & Answer Johanna Dow, chief executive, Business Stream Southern Water has become the second incumbent water com- pany to announce it will exit the non-household retail mar- ket when it opens in April next year. Scottish supplier Business Stream will take on the water and sewerage company's busi- ness customer base, taking its overall share of the market to 10 per cent. Dow talks to Utility Week about how the deal was reached, the company's main focus, and its plans for the future. Q: How was the deal reached? A: We have been in discussions now for almost 12 months. We were always open about the fact that we were looking for oppor- tunities to enter the market on scale, and that acquisition was one of those routes to market. We did a bit of research about 15 months ago to scan the market and look for whom we thought might be a suitable acquisition target, and from that we identi- fied Southern Water. Q: How many business cus- tomers will Business Stream now have? A: We will in effect double the size of our business in terms of customer numbers. So we'll be acquiring somewhere between 100,000 and 105,000 customers. Q: What was it that attracted you to Southern Water's cus- tomer portfolio? A: Size was an important fac- tor, so the fact that Southern has about 5 per cent of the com- bined UK market share was a big driver. Location was the other big driver, so the fact that it is located in the south of England, with Thames Water, Anglian Water and Water Plus all on the immediate doorstep. Although we've used this transaction to gain that immediate scale, we are also very much with an eye on medium to longer-term growth. Location will be impor- tant for that growth. Q: Will Business Stream set up a head office in the South? A: The combined business will be run from our headquarters in Edinburgh, with the exception of an account management team, which will be based locally. Q: Do you have plans for fur- ther acquisitions or deals to increase market share? A: We've made no secret of our ambitions – that we want to grow the business – and we've always said we were looking at joint venture, acquisition, part- nership, etc. Our immediate priority is to get this acquisition bedded in. It is important that we make sure the experience for customers is as seamless as pos- sible. We want to focus on that initially, but I would never say never, anything is possible. We're definitely very growth-focused. Q: Do you have any pressing concerns ahead of market opening? A: We're probably no different from any other company; it's really about the timescale. Nine months is not a lot of time, and there is still much to do to cre- ate the market infrastructure and everything else that is needed to compete in that market. Q: What is Business Stream's main focus now? A: To make this integration as seamless as we can. A key focus for us, as always, is looking aer our existing customers in Scot- land, and indeed in England. A key focus is English market read- iness generally, but we want to make sure that we really embed this transaction, and do it well. We said we wanted to enter the market on scale, and the fact that this will position us as the biggest retailer in the UK is something that we're very excited about. The Business Stream deal with Southern Water is the latest in the water sector as it prepares for market opening in April 2017. Here are the other deals: Bournemouth Water and South West Water Bournemouth Water and South West Water became the first companies to merge, and have since created a legally separate company – Pennon Water Services – to be based in Bournemouth, in preparation for market opening. Portsmouth Water and Castle Water In January, Portsmouth became the first water company to reveal that it would exit the market. Scottish supplier Castle Water will take on its business customers. Bristol Water and Wessex Water Bristol Water and Wessex Water have an existing joint venture – Water2Business – through which they will operate as a retailer. Severn Trent Water and United Utilities Early in March, Severn Trent Water and United Utilities stated their intention to team up and create a new and separate retail business, subsequently named Water Plus. The new business will have an estimated 25 per cent market share across England and Scotland. Other M&A

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