As Macquarie is questioned over National Grid deal, Australian investment bank pours £2bn to UK waste company
- The Sydney-based company is known as the ‘Vampire Kangaroo’ in the City
- Macquarie acquires the UK operations of recycling group Suez from Veolia. about
- Group gains more control over the handling of key parts of UK infrastructure
Australian investment bank Macquarie will take control of more of the UK’s key infrastructure, despite being brought in for questioning over the handling of the UK’s gas network.
The Sydney-based company, known as the ‘Vampire Kangaroo’ in the City, will acquire British recycling group Suez from French group Veolia in a £2bn deal.
Veolia agreed to buy his arch-rival Suez for £11bn last year after a bitter takeover battle. In an effort to derail the merger, Suez’s management threatened to sell parts of the group while raising legal blocks.
Responsible: Macquarie is run by Shemara Wikramanayake (pictured), who was born in London to Sri Lankan parents and immigrated to Australia at the age of 13
The partnership has also been criticized by UK competition authorities, as Veolia and Suez are the largest players in the waste management market.
The Competition and Markets Authority (CMA) said in May that the merger risked increasing the costs municipalities pay for waste collection by reducing the number of potential providers.
As a result, Veolia said yesterday it had agreed to sell Suez’s UK branch to Macquarie, but added it would remain “a major player” in the UK market.
But the sale of Suez’s UK operations to Macquarie threatens to spark controversy as the private equity group faces renewed scrutiny over its handling of key pieces of UK infrastructure.
Over the weekend, it was reported that the government is preparing plans to investigate Macquarie’s £5.8 billion attack in March on a 60 per cent stake in National Grid’s gas transmission and metering activities, a key part of the energy grid that over 4,000 miles of gas pipelines.
The sale, expected to close in the second half of this year, has been subject to review under the National Security and Investment Act, which gives the government the power to intervene in deals that raise national security concerns. .
The importance of the infrastructure is seen as the main driver for the research.
The review of the deal comes amid heightened concerns about the stability of Britain’s energy supply after the invasion of Ukraine disrupted Russian oil and gas exports and sent household bill prices soaring.
Macquarie’s takeover of the Suez business will also worry many in the city due to its dubious track record of investment in some of Britain’s largest companies. It earned the moniker Vampire Kangaroo after developing a reputation for buying companies, loading up on debt and sucking money for shareholders.
The company’s reputation had previously been tarnished by Thames Water’s stewardship. It sold the water company in 2017 for around £1.4bn after a decade of ownership during which it paid almost £3bn in dividends and built up £10bn of debt despite a complex business structure meaning it paid almost no corporate tax in the UK .
The sale also came months before the utility was sued by environmental regulators for polluting several rivers on a large scale between 2012 and 2014.
Despite the debacle, Macquarie was allowed to enter the water market again last year.
It took a majority stake in Southern Water, which supplies 4.7 million customers in Sussex, Kent, Hampshire and the Isle of Wight, for more than £1 billion.
And with offices in the city, Macquarie has other strong ties to the UK.
It is run by Shemara Wikramanayake, who was born in London to Sri Lankan parents and immigrated to Australia at the age of 13.