United Kingdom

Details

  • Industry: Energy and natural resources
  • Type: Press release
  • Date: 16/05/2014

Water Bill: M&A could drive efficiencies, however companies will face significant short-term challenges 

- Non-domestic competition could encourage new efficiencies

- Significant challenges for water companies as they navigate the new market changes

Commenting on news that non-domestic customers in England will have the freedom to switch their water and sewerage supplier in 2017, as part of the Water Bill gaining Royal Assent, Andy Cox, head of energy and natural resources at KPMG commented:
 
“Increasing non-household competition from 2017 will encourage companies to seek new efficiencies, which could spill over into the household retail segment, resulting in short-term gains during the next price review. However this will be difficult to achieve without some level of consolidation.
 
“From a transactions standpoint, whilst we might expect some of the water companies to contemplate exits from their non-household businesses, the fact that the companies will retain a major household business, could impact the speed and effectiveness of M&A developing in the short to medium term.
 
“The establishment of specific exits regulations and the finalisation of the 2014 price review, will also drive corporate actions, transaction appetite and timing. Equally we could expect institutional infrastructure investors who have been part of the sector, or who are contemplating becoming new entrants, to increasingly explore this retail option – either because their focus has always been on other parts of the water value chain, or because they now seek more lateral investment opportunities in the sector.
 
“Water companies will be looking towards the recent experiences of Scotland, the energy and telecoms sectors. They will be looking to assess and benchmark the implications of separation, potential organisational change and the advantages of moving before the 2017 deadline.
 
“Clearly there is still much work to be done to fully develop the market design and the rules on how the market will operate. This is a significant industry challenge which will impact on how successful and costly these reforms will be.”

 

- Ends -

 

Notes to editors:
For further information please contact:
Simon Chan, PR Assistant Manager, KPMG
Tel: +44 (0) 207 694 2024
Mobile: +44 (0) 7747 564 737

Email: simon.chan2@kpmg.co.uk


KPMG Press Office: 020 7694 8773

 

About KPMG
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff.  The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

 

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