Freshfields and Herbert Smith lead on latest foreign utilities takeover

Freshfields Bruckhaus Deringer and Herbert Smith Freehills (HSF) have advised on the £164.5m takeover of Sutton & East Surrey Water (SESW) by Japan’s Sumitomo Corporation.

The deal is the latest in a string of acquisitions of UK utilities groups by Asian buyers following the purchases of EDF’s UK power grids, Northumbrian Water Group and Wales & West Utilities over the past three years.

The latest deal sees Sumitomo acquire SESW from Aqueduct Capital, which is owned by iCON Infrastructure.

SESW supplies drinking water to residents and business in Surrey, West Sussex, West Kent and South London areas, including Gatwick Airport, with the patch covering 835 sq km and a population of roughly 655,000.

Its owner Aqueduct was advised by a Freshfields team led by corporate partners Claire Wills and Martin Nelson-Jones. They were assisted by senior associate Graham Kirk and associate Jason Varney, as well as tax partner Richard Ballard and competition partner David Aitman.

HSF corporate partner Malcolm Lombers acted for Sumitomo, with the lead associate understood to be Daniel Driscoll.

Background to this deal:

Aqueduct has owned SESW the investment group spun off from Deutsche Bank roughly two years ago. Deutsche originally bought the water supplier from private equity outfit Terra Firma in 2006 for £189m, soon after the private equity firm led by Guy Hands was prevented from abandoning a £453m agreed bid for its holding company East Surrey Holdings.

Freshfields’ relationship dates back to the target’s days when it was owned by Deutsche, a longstanding client of the magic circle firm.

Last year CMS Cameron McKenna and Linklaters advised on the takeover of Wales & West Utilities by Cheung Kong Infrastructure of Hong Kong (26 July 2012). 2011 saw Freshfields lead for the same buyer on its £2.4bn acquisition of Northumbrian Water (2 August 2011).