As Macquarie is probed over National Grid deal, Australian investment bank splashes out £2bn on UK waste firm
- The Sydney-based firm is often known as the ‘Vampire Kangaroo’ within the City
- Macquarie will snap up UK business of recycling group Suez from Veolia
- Group faces more scrutiny about its handling of key parts of UK’s infrastructure
Australian investment bank Macquarie is ready to take control of more of the UK’s key infrastructure – despite being hauled in for questioning over its handling of Britain’s gas grid.
The Sydney-based firm, often known as the ‘Vampire Kangaroo’ within the City, will snap up the UK business of recycling group Suez from French group Veolia in a deal value £2billion.
Veolia agreed to purchase Suez, its arch-rival, for £11billion last yr following a bitter takeover battle. In a bid to derail the merger, Suez’s management threatened to sell parts of the group while also putting up legal blocks.
In charge: Macquarie s run by Shemara Wikramanayake (pictured), who was born in London to Sri Lankan parents and emigrated to Australia on the age of 13
The tie-up also drew scrutiny from the UK’s competition regulators as Veolia and Suez are the most important players within the waste management market.
The Competition and Markets Authority (CMA) said in May that the merger risked increasing costs councils pay for rubbish collection by cutting the variety of possible providers.
Consequently, Veolia said yesterday it had agreed to sell Suez’s UK arm to Macquarie, but added it might remain ‘a significant player’ within the British market.
However the sale of Suez’s UK business to Macquarie risks attracting controversy, because the private equity group faces renewed scrutiny about its handling of key parts of the UK’s infrastructure.
It was reported over the weekend that the Government is drawing up plans for a probe into Macquarie’s £5.8billion swoop in March on a 60 per cent stake in National Grid’s gas transmission and metering operation, a key a part of the energy grid which maintains greater than 4,000 miles of gas pipes.
The sale, which was expected to be accomplished within the second half of this yr, has been called in for review under the National Security and Investment Act, which provides the Government the facility to intervene in deals that raise national security concerns.
The importance of the infrastructure is known to be the important motive for the probe.
The review of the deal comes amid increased worries in regards to the stability of the UK’s energy supply after the invasion of Ukraine disrupted Russian oil and gas exports and sent prices of household bills surging.
Macquarie’s acquisition of the Suez business can even worry many within the City due to its questionable track record of investing in a few of Britain’s biggest firms. It earned its Vampire Kangaroo nickname after developing a fame for getting corporations, loading them with debt and sucking out money for shareholders.
The firm’s fame was previously tarnished by its stewardship of Thames Water. It sold the water company for around £1.4billion in 2017 after a decade of ownership during wherein it paid out almost £3billion in dividends while amassing debts of £10billion, despite a complex-corporate structure meaning it paid almost no corporation tax within the UK.
The sale also got here months before the utility firm was prosecuted by environmental regulators for extensively polluting several rivers between 2012 and 2014.
Despite the debacle, Macquarie was allowed to wade back into the water market last yr.
It snapped up a controlling stake in Southern Water, which supplies 4.7m customers across Sussex, Kent, Hampshire and the Isle of Wight, for over £1billion.
And with offices within the City, Macquarie has other strong links with the UK.
It’s run by Shemara Wikramanayake, who was born in London to Sri Lankan parents and emigrated to Australia on the age of 13.