(Bloomberg) -- Macquarie Group won’t be able to repeat the practice of paying hefty dividends from Southern Water Ltd. in the same way that it did while it ran Thames Water, the UK regulator’s boss said on Tuesday.
Macquarie has drawn criticism for taking out high dividends while it part-owned and managed Thames Water from 2006 to 2017, with the company at risk of running out of cash early next year unless a rescue deal is agreed. The Australian group has owned a majority stake in Southern Water since 2021, another UK utility struggling with an onerous debt pile.
“At Thames Water during Macquarie’s tenure large amounts of dividends were paid, we have changed the rules around that to be very clear that dividends need to be linked to performance,” Ofwat Chief Executive David Black told UK lawmakers at a committee hearing on Tuesday. “Macquarie has invested, so far, £1.6 billion into Southern Water, so I guess I am pleased to say that the money is going the other way.”
Southern’s already blocked from paying dividends to shareholders until at least 2025 after a downgrade by Fitch Ratings last year. New Ofwat rules starting in 2025 mean dividend payments won’t restart unless Southern’s credit rating improves.
“We oversaw the largest investment program in Thames Water’s history, with £11 billion invested to upgrade the network and improve its performance,” a spokesperson for Macquarie said. “We are backing Southern Water’s transformation, having provided more than £1.6 billion of fresh equity to help accelerate its operational turnaround.”
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