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Canadians set to strike again for UK water giant Severn Trent as rising household bills attract foreign predators

A Canadian-led consortium targeting Severn Trent is set to raise its £5billion offer for the water company after an initial approach was rebuffed last week.

It has until June 11 to submit a fresh bid under UK takeover rules, giving it time to see full-year results from Severn and the rest of the industry before deciding on a new figure.

The consortium, led by Canada’s Borealis Infrastructure pension fund, includes Kuwait’s Investment Office and Britain’s Universities Superannuation Scheme.

Foreign predator: A Canadian-led consortium is targeting Severn Trent

Severn , which rose 18 per cent when news of the deal leaked last week, closed at £20.50. Sources noted that the shares had soared over the past six months amid take- over speculation, which boosted the value of all the remaining listed water firms.

  More... SIMON WATKINS: Let's end foreign raids on our valuable infrastructure assets Water provider Severn Trent rejects 'too low' £5billion takeover bid by consortium of three buyers

‘Talk of coming back with a £22 to £23-a-share offer fails to take account of the 40 per cent premium already evident in the share price,’ said one source. ‘Severn Trent’s shares closed at £20.50 on Friday – that’s the price the market is expecting.’ Neither Severn nor the consortium would comment.

Severn, run by chief executive Tony Wray, who has announced plans to leave, serves 3.7million households in the Midlands and Wales. It is one of only three publicly quoted water companies out of the 22 in England and Wales that remain, 24 years after the privatisation of the industry.

The rest have been taken private by mainly overseas investment firms such as Australia’s Macquarie, which owns Thames Water, where China’s CIC has a nine per cent stake.

Water companies are attractive because the regulator Ofwat allows firms to increase household charges on the basis of inflation, providing a guaranteed rate of return.

The regime has proved controversial. Though firms point to the unprecedented level of investment in the industry since privatisation in 1989, bills have increased by 50 per cent to an average of £388 this year. This is  3.5 per cent up on last year.

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