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Finance & Investment This week Affinity Water sold for estimated £1.6bn UK's largest water-only company, Affinity Water, insists it will 'continue to operate as normal' Affinity Water has been sold in a deal estimated to be worth £1.6 billion. Following a strategic review, Infracapital and Morgan Stanley Infrastructure decided to sell their 100 per cent inter- est in Affinity Water Acquisi- tions (Investments) – which indirectly owns 90 per cent of Affinity Water – to a consortium comprising Allianz Capital Partners, HICL Infrastructure Company and DIF. At the same time, the buyers are also acquiring Veolia Water UK's 10 per cent stake in Affinity Water. Both transactions are expected to complete simultaneously in May 2017. Affinity Water chief executive Simon Cocks said: "As a business we will continue to operate as normal, focused on achieving our strategic objective to become the lead- ing community-focused water company in the UK. We look forward to welcoming our new investors." Affinity Water is the UK's largest water-only com- pany, by both revenue and population served. It owns and manages water assets and networks in an area of approximately 4,515km 2 , split over three regions in the southeast of England. The company is the sole supplier of drinking water in these areas. Affinity supplies 900 million litres of water a day to more than 3.6 million people, serving 1.5 million homes and businesses. It operates 98 water treatment works. It has committed £77 million to its universal metering pro- gramme, £22 million to achieve sustainable abstraction and £63 million for mains renewal and replacement. LV ENERGY £25m for hydrogen demo for heating The Department for Business, Energy and Industrial Strategy (BEIS) has revealed plans to pump £25 million into a new programme exploring the use of hydrogen for heating. The aims of the demonstra- tion project include defining a hydrogen quality standard and developing and trialling hydrogen-fuelled appliances for homes and businesses. BEIS has launched a £5 mil- lion tender to find a contractor to manage the programme, which will run from 2017 to 2020. The tender notice says it will "serve to support and inform future policy appraisal in government and to inform the development of policies and measures to meet UK carbon budgets". ENERGY Scottish Power Q1 profits collapse Scottish Power has blamed mild weather, rising non-energy costs and tighter margins for a collapse in profit for the first quarter of 2017. The big six supplier reported Ebitda of £47 million for the three months to the end of March – a 73 per cent fall on the same period last year. Customer numbers remained level over the period at 5.5 million, but were up by around 100,000 year on year. Even so, retail earnings fell 58 per cent to £58 million. The generation division went from a £34 million profit to an £11 million loss, in large part due to the closure of Longannet in March 2016. Scottish Power chief corpo- rate officer Keith Anderson said: "Margins across the industry are tight because competition has been increasing, and switching numbers remain high." ELECTRICITY Drax buys bankrupt US pellet plant Drax has moved a step closer to its goal of self-supplying 30 per cent of the biomass pellets it uses at its power station in Yorkshire, aer completing the purchase of a bankrupt pellet plant in the US. Following a court hearing to approve the results of an auction on 30 March, Drax bought the bulk of the assets of Louisiana Pellets for $35.4 million (£27.6 million), including its produc- tion facility in the town of Urania. The acquisition will increase Drax's self-supply capacity by 450,000 tonnes a year, bringing the share of total consumption to around 20 per cent. The pellet plant will resume production in 2018 following a programme of upgrades and optimisation. Buyers will also acquire Veolia's 10% stake Stock watch 400 350 300 250 DRAX SHARE PRICE, FIVE DAY Jul 2016 Sep Nov Jan 2017 Mar DRAX SHARE PRICE, ONE YEAR The stock price of the Drax Group briefly soared on the morning of 2 May aer Jefferies upgraded it from "underperform" to "buy". The analysts said they believed the current share price did not reflect the value of the company's entire portfolio of assets, which includes its power station in Yorkshire. Shares in the Drax Group rose to 336p when the markets opened at 8am on 2 May, but by 9.30am they had fallen back to 323.80p. 340 330 320 310 300 26 Apr 27 Apr 28 Apr 2 May May UTILITY WEEK | 5TH - 11TH MAY 2017 | 21 pence pence