A&O scores £4.2bn Southern Water victory

An Allen & Overy (A&O)-advised consortium has emerged victorious in the £4.2bn auction for Southern Water.

Veteran corporate partner Alan Paul led the team for A&O after financial advisers Maquarie recommended the firm. Paul steered Macquarie to victory in the £8bn auction for Thames Water last October. Corporate finance partner Susan Howard co-led the team on this deal.

A&O advised Greensands Investment, the consortium led by JP Morgan Asset Management and Australia’s Challenger Infrastructure Fund (CIF).

It paid £1.3bn for the water utility and assumed £2.9bn worth of debt. The consortium also comprises UBS, Hermes and Access Capital Partners. The latter managed a sub-group of Australian superfunds.

In addition to A&O, the consortium members sought advice from their own firms. Herbert Smith co-advised UBS, with corporate partners Malcolm Lombers and Ben Ward leading. UBS will hold an 18 per cent stake in the water company.

SJ Berwin advised long-standing client Hermes. Stroock Stroock & Lavan advised JP Morgan will take the highest stake, at 32 per cent, followed by CIF, with 27 per cent. Access was advised by Blake Dawson Waldron.

Offshore firm Ogier advised the consortium on the creation of its Jersey-domiciled bid vehicle. Structured finance partner Chris Byrne led the team.

The consortium beat rival bids from Goldman Sachs, at one time thought to be the front-runner in the auction for the utitlity that provides water for one million homes in Hampshire, Kent and Sussex.

Southern Water was put up for sale by the Royal Bank of Scotland (RBS), which turned to longstanding advisers Linklaters, led by partner William Buckley. RBS bought Southern Water for £2bn from Simmons & Simmons client Veolia in 2003.

Clifford Chance advised Macquarie on the debt package.