Ancala Partners, an experienced investor in critical mid-market infrastructure, is to make a substantial further equity investment into Portsmouth Water, a regulated water business in the UK, to fund construction of the Havant Thicket Reservoir and support other growth projects.
Alongside the additional funding, Portsmouth Water has signed a sustainability-linked financing package with ING, NatWest and Siemens to fund the reservoir project. The financing package features a margin-based incentive linked to Portsmouth Water’s performance against environmental and social targets such as water leakage, supply interruptions, carbon reduction, biodiversity and affordability, actively integrating ESG metrics into the company’s financing strategy.
Havant Ticket Reservoir is the first major reservoir to be developed in the UK since the 1980s. The GBP120 million project will play a key role in reducing abstraction from the South East’s internationally renowned chalk streams, the River Itchen and River Test. Portsmouth Water will work in partnership with Southern Water to enable the reliable delivery of 21 million litres of water a day for Southern Water customers in Hampshire, through an 80-year bulk supply agreement. The reservoir is expected to be fully operational by 2029.
With the UK facing the effects of climate change and a growing population, this unique partnership structure, where one water company shares supplies with another company’s customers, represents the first of its kind, and a new way of working within the UK regulated water sector.
In addition to valuable water resources, Havant Thicket Reservoir will provide a new green leisure hub for communities close to the site. A 110 hectares of woodland and pasture will be created or improved and a new ten hectare wetland will also be established. A long-term grant scheme will also be initiated to support environmental projects in the local area.
In addition to funding the reservoir, the further equity investment will allow the company to pursue additional growth opportunities. These include the development of renewable generation capacity to supply the company’s operations with green electricity.
Lee Mellor, Partner, Ancala Partners, says: “The Havant Thicket Reservoir is an important project for Portsmouth Water and will secure vital water resources for South East England. We are delighted to be supporting the project through additional investment into the company. The sustainability-linked financing secured by Portsmouth Water will incentivise the achievement of our ESG objectives. Enhancing the ESG performance of our portfolio companies is core to our active asset management philosophy.”
Bob Taylor CEO, Portsmouth Water, says: “Havant Thicket Reservoir will help to ensure there’s enough water to go around in our water-stressed regions in the decades ahead. Securing the financing package represents a significant step towards progressing with this major project – the first UK reservoir to be built since the 1980s. We’re determined it will provide many benefits for our communities, the environment and wildlife, and that is why our financing package has been linked to meeting crucial ESG targets.”
