Investment manager's Portsmouth acquisition "preserves independence"

Infrastructure investment manager, Ancala Partners, has agreed to acquire the parent company of Portsmouth Water, South Downs Capital Limited for an as yet undisclosed sum. South Downs is majority owned by its staff and has a regulatory capital value of about £130 million.

Ancala said it will allow Portsmouth “to pursue growth opportunities by providing access to additional capital. This includes potential investments to utilise the company’s privileged water resource position for the benefit of both Portsmouth Water customers and neighbouring areas through the provision of bulk supplies.”

Portsmouth has established plans to construct new winter storage reservoir on its Havant Thicket site. The water company’s chair, Mike Kirk, said the Ancala deal “preserves the company’s independence, whilst providing access to capital to further enhance the business, including the development of significant regional water resources.”

Industry Partner at Ancala and former Thames Water chief, David Owens, said: “We fully support Portsmouth Water in its plans for future development of the business.” Owens will join the Portsmouth board as a non-executive director following completion of the acquisition. Ancala partner, Lee Mellor, described Portsmouth as “an excellent fit with our core investment strategy, which targets mid-market infrastructure businesses that deliver long-term, inflation-linked cashflows.”

Portsmouth managing director, Neville Smith, said: “We look forward to working closely with Ancala’s experienced team to further improve our services to customers whilst continuing to deliver excellent value for money.”

Ancala last year lost out in a bidding battle with Severn Trent to acquire Dee Valley Water. During that bid the investment firm emphasised its intentions to preserve Dee Valley as “run by staff situated locally within the community who will be incentivised to deliver excellent customer service to that community,” and to "maintain it as an independent local water company, operating from its current sites.”

South Downs Capital is currently 73% owned by the South Downs Employee Benefit Trust with the equity balance owned by individual private shareholders.

The Portsmouth acquisition is expected to complete in March this year.