Macquarie has said that it will inject £550m into Southern Water in an attempt to turn the company around.

The Australian investment bank has confirmed that the investment will support the water company in overhauling its leaky pipes and faulty sewage works.

Southern Water provides water to over two million customers, whilst also providing water waste services to almost five million customers across Kent, Hampshire, Sussex and Isle of Wight. It said the funding will “maintain the momentum of its turnaround plan and manage the impact of a high inflation and interest rate environment on its operating, maintenance and funding costs”, as well as increase its investment network by £3bn by the end of 2025.

The investment extends Macquarie’s ownership of Southern Water, after it purchased a 62% stake in 2021, putting more than £500m into the regulated company.

The bank promised in 2021 to put the company “back on a stable footing” after Southern Water was fined £90m for deliberately dumping billions of litres of raw sewage off the north Kent and Hampshire coasts.

The move marked Macquarie’s decision to return to the water market, after it sold its stake in Thames Water in 2017, leaving the UK’s largest water company with a “mountain of debt”.

Head of EMEA infrastructure at Macquarie, Martin Bradley, said: “When we invested in Southern Water in 2021, we said its operational transformation would take time. Whilst the company is making good initial progress, maintaining this momentum depends on significant and sustained investment in its infrastructure.

“Instead of reducing our ambitions in the face of higher cost inflation and interest rates, we are backing Southern Water with additional equity, enabling it to invest circa £1bn more than the funding it received via the regulatory framework for the period.”

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