Water utility company Southern Water receives a £1.2 billion cash injection through a financial maneuver likened to a "vampire kangaroo" bailout.
In a significant move to enhance the financial and operational performance of Southern Water, Australian investment firm Macquarie Group has taken a major stake in the utility company. This follows Macquarie's previous ownership of Thames Water, where it made substantial investments in the network, more per customer than any other English or Welsh water company.
Since investing in Southern Water from 2021 onwards, Macquarie has committed approximately £1.65 billion in equity to support the company's growth and infrastructure programs. As of July 2025, Macquarie led a consortium committing an additional £1.2 billion in equity, starting with an initial investment of £655 million, followed by an expected £545 million by December. This injection is aimed at managing Southern Water's high debt load and funding infrastructure improvements over the next five years.
The new capital will be directed towards the largest growth investment program in the sector relative to Southern Water's size, benefiting both customers and the environment. Notably, there are no forecast dividends planned for the 2025-2030 regulatory period to prioritise reinvestment.
Southern Water serves 4.7 million people across southern England and faces challenges in its past related to environmental compliance. The fresh equity injections emphasise investment in infrastructure and environmental improvement, signalling an effort to address past shortcomings and improve environmental performance moving forward.
Macquarie's senior managing director, Martin Bradley, has stated that they are aligned with the government's ambition to reform the sector. Macquarie Asset Management has expressed encouragement by the desire to achieve the reset required to effect real long-term change in the sector.
Southern Water aims to halve the overall number of pollution incidents by 2030, reduce its leakage rate from 17 per cent to 13 per cent, and cut the amount of water it takes from the environment by 50 million litres per day by the same year.
The new investment by Macquarie will directly support Southern Water's financial resilience and improving performance. Southern Water has also been fined a record £90 million four years ago for dumping raw sewage into the sea, but the company now seems determined to turn a new leaf under Macquarie's guidance.
However, Macquarie has faced significant condemnation for its previous part-ownership of Thames Water, with Thames Water's debts more than tripling from £3.4 billion in 2006 to £10.8 billion in 2017. The company was also fined a record £20.3 million in 2017 for large untreated sewage leaks totaling 1.4 billion liters over several years and a massive £122.7 million fine in 2025 for wastewater breaches and improper dividend payments.
Despite these past challenges, Macquarie remains optimistic about Southern Water's potential for improvement. With the new investment, Southern Water will have the financial resources to maintain its positive momentum and work towards a cleaner, more sustainable future for its customers and the environment.
Macquarie Group is investing approximately £1.65 billion in equity to support Southern Water's growth and infrastructure programs, as they did in Thames Water previously, showcasing their interest in both finance and business. The new capital will not only boost Southern Water's financial resilience but also support environmental improvements, as the company strives to address its past compliance issues and work towards a cleaner future.