PwC: Shareholder returns for water companies remain strong

By Rob Starr, Content Manager, Big4.com

According to the latest analysis of the sector by PwC’s Valuations experts, UK listed water companies have consistently delivered shareholder returns in excess of the FTSE All Share Index over the last 17 years.

So far in 2012 there have been four transactions involving privately held UK water companies, and PwC expects deal activity to continue, boosted by a growing number of sovereign wealth funds and pension funds looking to invest directly in regulated utilities, airports and other infrastructure assets.

Laura Hill, valuations senior manager, PwC comments:

“Ofwat’s consultations regarding future regulatory price controls are underway. The market responded negatively to the announcement by the water industry regulator on 26 October. Listed water companies’ average share prices fell by 8% in the two weeks that followed, which raises the question of whether the market may have been over-reacting to these proposals,” she said.  “Whilst the regulatory reform will clearly have some impact on the sector, the extent to which this will have positive or negative impact on individual companies cannot yet be quantified. We believe that, fundamentally, the long term attractiveness of the regulated water sector as an infrastructure investment proposition is not at risk.”