HDF (UK) Holdings / Hastings Funds Management / Macquarie Luxembourg Water Sarl (OFT)

OFT closed case: Completed acquisition of Macquarie Luxembourg Water Sarl by HDF (UK) Holdings Limited.

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

No. ME/2714/06

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.

PARTIES

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 HDUF.

HDF (UK) Holdings Limited (HDF (UK)) is jointly owned by HDUF and UTA.

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 acquisition.

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.

TRANSACTION

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.

JURISDICTION

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 million.

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.

ASSESSMENT

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.

DECISION

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.

NOTE

  1. Regulated.

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