Completed acquisition of Macquarie Luxembourg Water Sarl (now Hastings Luxembourg Water Sarl) by HDF (UK) Holdings Limited jointly owned by Utilities of Australia Pty Limited (in its capacity as trustee of Utilities Trust of Australia) and Hastings Funds Management Limited (in its capacity as responsible entity (trustee) of Hastings Diversified Utilities Fund).
Affected market: Water
The OFT's decision on reference under section 32(b) of the Water
Industry Act 1991 given on 16 November 2006. Full text of decision
published 23 November 2006.
Utilities Trust of Australia (UTA) is an unlisted open-ended unit
trust which takes minority positions in infrastructure projects,
privatisations and developments in Australia and internationally. The
investors in UTA are mainly Australian superannuation funds.
Utilities of Australia Pty Limited is trustee of UTA.
Hastings Diversified Utilities Fund (HDUF) was established to invest
in utility infrastructure assets, is a managed investment scheme
regulated in accordance with the Australian Corporations Act and is
listed on the Australian Stock Exchange.
Hastings Funds Management Limited is responsible entity (trustee) of
HDF (UK) Holdings Limited (HDF (UK)) is jointly owned by HDUF and
UTA and HDUF jointly own Mid Kent Water Limited (Mid Kent Water)
which is a licensed supplier of drinking water to customers in the south
east of England in particular Kent and parts of Sussex. Mid Kent
Water's unregulated activities include the supply of water operational
services, utility construction and commercial services to business and
domestic customers. Mid Kent Water had appointed [Note 1]
turnover of £43.9 million for the year ended 31 March 2006.
Hastings Luxembourg Water Sarl (Hastings) was the holding company
for South East Water Limited (South East Water) at the time of the
South East Water is a licensed supplier of drinking water to
customers in the south east of England in particular parts of Kent,
Sussex, Surrey, Hampshire and Berkshire. South East Water's unregulated
activities consist of certain billing services, air and water analytical
services, mast rentals for mobile networks, land searches and
engineering services for capital works. South East Water had appointed
turnover of £112.6 million for the year ended 31 March 2006.
Utilities of Australia Pty Limited (in its capacity as trustee of UTA)
and Hastings Funds Management Limited (in its capacity as responsible
entity (trustee) of HDUF) (through HDF (UK)) acquired 100 per cent of
the share capital of Macquarie Luxembourg Water Sarl (now Hastings) on 2
October 2006. The administrative deadline is 21 December 2006. The
statutory deadline is 1 February 2007.
As a result of this transaction, UTA, HDUF, HDF (UK) and Mid Kent Water
have ceased to be distinct from Hastings and South East Water. The UK
turnover of South East Water and Mid Kent Water each exceeds £10
The OFT therefore believes that it is or may be the case that a merger
of two water enterprises within the meaning of section 32(b) of the
Water Industry Act 1991 (the Act) has taken place.
VIEWS OF THE WATER SERVICES REGULATION AUTHORITY (OFWAT)
OFWAT considers that the transaction amounts to a merger of two water
enterprises within the meaning of section 32(b) of the Act.
THIRD PARTY VIEWS
The OFT has not received any third party concerns.
As described above, UTA and HDUF jointly own HDF (UK) which has acquired
control of South East Water. UTA and HDUF already jointly control Mid
Kent Water. Both Mid Kent Water and South East Water each have turnover
exceeding £10 million.
Consequently, the OFT believes that it is or may be the case that a
merger of two water enterprises within the meaning of section 32(b) of
the Act has taken place.
The OFT has therefore decided to refer the completed acquisition by HDF
(UK) Holdings of South East Water to the Competition Commission pursuant
to section 32(b) of the Act.