Business Weekly - Cambridge, UK

Cambridge Water has a long-established pedigree that dates back to 1853. It has an integrated distribution system that includes seven service reservoirs, 10 water towers and 2,200 km of water mains, supplying a population of around 298,000 in an area that spans over 1,173 sq km.

The company was previously owned by Madrid-listed Union Fenosa. Cambridge Water’s profit after tax in 2003 was £9.8m, which includes a profit of £7.7m from sales of tangible fixed assets. Its net assets at December 31 were £28m.

According to the Office of Population, Censuses and Surveys in the UK, population growth within Cambridge Water’s area has been one of the highest in the last two decades, with a cumulative annual growth rate four times the UK’s average.

The growth of Cambridge Water’s customer base is anticipated to be one of the highest in the UK. Cambridge is one of the largest employment centres in the region with some 80,000 jobs and the area is displaying rapid economic growth, particularly in knowledge-based businesses around Cambridge University.

H L Kam, CKI’s group managing director, said: “CKI has always shown an interest in water assets and this acquisition marks a major milestone for the company. We have been vigorously seeking quality water projects for some time.

“Cambridge Water represents our second acquisition in water assets in a month – we acquired AquaTower Pty Ltd in Australia at the end of March – and we expect that this segment will become one of CKI’s core businesses. The acquisition is our first major foreign investment outside of China and Australia.

“Cambridge Water is a robust water company with a projected low-teen equity internal rate of return. The Cambridge area is flourishing and we expect to see sustained growth that continues to outperform the national average.

“Although a first venture in the UK for CKI, other members of the Cheung Kong Group including Hutchison Whampoa, have made substantial investments in the country, making the group the largest single Asian investor in the UK with interests in projects totalling over £11 billion.

“Our group’s diversified portfolio of investments in the UK ranges from ports, telecoms, property to retail. The acquisition provides us with an entry into this market and a platform to further expand in the region. We are currently studying a few projects in the country. ”