Macquarie digs deeper for redemption at Southern Water. There was no alternative | Nils Pratley
Many took the view in 2021 that Macquarie should have been run out of town, rather than be allowed to own another English water company.The giant Australian financial outfit’s former outing, remember, was at Thames Water from 2006 to 2017, which was when the absurd games of financial leverage began at the UK’s biggest water company.The then-chair of Ofwat later told MPs he asked himself the question “What do we do here, with that reputation?” when Macquarie made the best financial offer to rescue Southern Water.The deal was done eventually with Ofwat’s blessing.Macquarie-managed funds injected £1bn to take control and its infrastructure boss declared in an open letter that the firm would be “a responsible long-term steward of Southern Water and believes it can help the company deliver the transformation it requires”.
Part of that statement – the bit about being in it for the long term – is clearly true.Macquarie is now rescuing Southern for a third time, in effect.An extra £550m was injected in 2023.Now its consortium (of which it and its managed funds are about 90%) is putting in up to £1.2bn in equity to recapitalise Southern’s operating company.
The process is convoluted since only £655m is binding; a further £245m is intended to follow by the end of the year and the balance of £300m depends of the outcome of Southern’s appeal to try to secure bigger bill increases than the 53% allowed by Ofwat,But, in the shoes of the regulator or a fearful secretary of state, Steve Reed, you’d be breathing a sigh of relief,Their nightmare was the thought that the current refinancing crisis at Thames would spill over to Southern, the next most stressed operator,Instead, Southern should now have sufficient capital to get it through the current five-year regulatory period,Unlike at Thames, the fisticuffs with bondholders took place behind closed doors.
Lenders are taking a write-down from £865m to £415m across the complicated holding company group structure in what is a mini debt-for-equity swap to supplement the new capital.Macquarie’s approach to transparency didn’t extend to giving a leverage ratio for the regulated entity in recapitalised form – a critical metric – but the ratio is obviously lower than it was before the deal.Yet the Australian attempt at watery redemption is not quite the upbeat tale of emerging success presented in Tuesday’s announcement.The claimed “good progress” with Southern’s transformation plan requires a large helping of context.Yes, pollution incidents may be down by 40%, but the top executives are still on Reed’s banned list for bonuses on account of spills.
Meanwhile, the company got a two-star rating in the Environment Agency’s last assessment report – better than the one star Macquarie inherited, but still equal bottom-of-the-table.Ofwat’s separate performance scorecard noted that in 2023-24 Southern “reported the largest percentage net underperformance payment for a fourth consecutive year”.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionThose regulatory reports are almost a year old, so maybe the next annual crop will provide evidence of the “momentum” behind the turnaround.Until then, however, Macquarie has merely demonstrated it can cough up capital when there is no realistic alternative.On-the-ground operational delivery is what counts.
There is a long way to go,If the exercise is costing more than Macquarie expected in 2021, sympathy may be limited,
‘Most special day of my life’: world No 733 Tarvet enjoys limelight in Alcaraz defeat
As a script it surely would have been rejected by Hollywood for being too outlandish. A 21-year-old British student, who has never played on the main tennis tour before, suddenly finds himself on Centre Court with 15,000 people cheering him on. And on the other side of the net is the Wimbledon champion.Yet that was the situation that Oliver Tarvet, the world No 733 from St Albans, found himself in on Wednesday as he lined up to face the brilliant Spaniard Carlos Alcaraz.And while there was no fairytale ending, with Tarvet losing 6-1, 6-4, 6-4 he left to a standing ovation and warm words from his illustrious opponent, who predicted that he could go on to achieve great things
Emma Raducanu storms past 2023 Wimbledon champion Vondrousova in style
On the eve of another tense fortnight at Wimbledon, Emma Raducanu had every reason to feel overwhelmed by the circumstances she found herself in. As her troublesome back injury continued to restrict her work on the practice court, she has also had to deal with undisclosed personal issues. Her expectations for the tournament were low.It is reflective of Raducanu’s personal growth and maturity that she has taken those difficulties in her stride and found a way to continue to move forward. In one of her most significant matches of the year so far, the British No 1 spectacularly rose to the occasion on Centre Court, producing a brilliant performance to outplay the 2023 Wimbledon champion Marketa Vondrousova 6-3, 6-3 and return to the third round
Carlos Alcaraz shakes off Tarvet from his back without inhibitions or regrets | Jonathan Liew
There were negatives, of course. Shall we focus on the negatives? Shall we dwell on the frailties a little? The uncharacteristic errors, the double faults, an occasional scruffiness at the net, the frequent slumps in intensity? Shall we marvel at the fact that the lowest-ranked player in the tournament earned more break points (11) than one of the greatest players of his generation (10)? Shall we warn, in a tone of affected sternness, that the defending champion will have to raise his game on this evidence?Of course we shall, because this is Carlos Alcaraz, and because there is an entire cottage industry built around maintaining the idea that Alcaraz is in a state of crisis at all times, a state of crisis so acute that it is necessary to feign round-the-clock concern for him. We just want to see all that rich talent fulfilled. That’s all it is. Sincerely and genuinely
Katie Boulter crashes out of Wimbledon with misfiring serve as Sonay Kartal advances
Backing up a big win is never an easy thing, but when you hit 14 double faults, it’s almost impossible. After her outstanding win over ninth seed Paula Badosa on the opening day, Katie Boulter harboured genuine hopes of going further than ever before at this year’s Wimbledon, but her serve misfired badly and her 6-7 (7), 6-2, 6-1 defeat by world No 101 Solana Sierra, a lucky loser from Argentina, will linger for a while.“Of course it hurts,” Boulter said. “It’s a really tough pill to swallow. It always is here
‘Like a kid in a sweet shop’: Brailsford back calling shots at Ineos Grenadiers
Dave Brailsford has returned to a leading role at Ineos Grenadiers on the eve of the 2025 Tour de France, calling the shots on team selection and performance objectives, barely a month after he stepped back from his role at Manchester United.“Dave’s definitely coming to the Tour,” John Allert, the team CEO, said. “He’s like a kid in a sweet shop, talking about climbs and getting back to the mountains. That’s the battlefield that he knows and loves.”Brailsford, who steered British Cycling to serial Olympic success and Team Sky to Tour de France dominance, will be present for much of this year’s Tour, as Geraint Thomas, the 2018 champion, makes his final appearance in the three-week race
Restrained Pant struggles as India’s new safety-first style fails to suit situation | Andy Bull
Turns out Rishabh Pant is a dab hand at doing impressions. At Edgbaston he showed off his new one, of the batter his coaches would like him to be. Pant was, by the standards of his own scatterbrained batting, a model of self-control, and restricted himself to just one glorious four and a single crisp, delicious six in the 60 minutes or so he was at the crease. They were good ones, a roly-poly sweep off Shoaib Bashir and a skip down the pitch to punch another of his deliveries over long-on, but otherwise Pant restrained himself to showing off his range of ascetic leaves, blocks and defensive shots.There was, it’s true, the odd moment or two when he nearly broke character
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