EQT acquires Yorkshire Water stake at discount
Private equity firm EQT has acquired a significant stake in Yorkshire Water at a valuation below the utility’s regulated asset base, highlighting the pricing pressures facing UK water companies as investors weigh financial, regulatory and political risks across the sector.
According to reports, EQT’s acquisition of joint control of Yorkshire Water from Deutsche Bank’s asset management business valued parent company Kelda Holdings at approximately £9.4 billion, equivalent to around 90% of its regulatory capital value (RCV). The transaction marks a notable departure from historical valuation levels, with UK water assets traditionally changing hands at premiums to their regulated asset bases.
The discounted valuation reflects growing investor caution towards the sector following the well-publicised financial difficulties at Thames Water, elevated debt burdens across the industry and mounting political scrutiny over environmental performance, particularly sewage pollution.
Yorkshire Water, which serves around 5.7 million customers across northern England, has itself faced increased regulatory oversight. Regulator Ofwat has previously criticised the company over its environmental performance and required it to repay a £600 million shareholder loan amid concerns about its financial position. As part of the transaction, EQT agreed to contribute towards the repayment of that loan.
The deal illustrates how valuations have shifted across the UK water sector. Historically, listed water companies have traded at premiums to regulatory capital value, reflecting the predictable, inflation-linked cash flows generated by regulated infrastructure assets. Market data indicates that listed water companies were valued at an average premium of around 10% to RCV over the three decades to 2024, while transactions involving UK water assets between 2017 and 2024 were completed at an average premium of approximately 36%.
Despite the lower valuation, EQT’s investment signals that private capital continues to see opportunities in regulated infrastructure where investors believe long-term fundamentals remain attractive.
The firm’s interest is understood to have been supported by the regulatory settlement allowing certain UK water companies to implement substantial customer bill increases between 2025 and 2030, improving future earnings visibility despite ongoing operational and political challenges.