Ancala Partners portfolio company, Portsmouth Water, achieves key milestones towards development of first major reservoir in the UK since 1980s

21 February 2023

• UK water regulator Ofwat approves budget for reservoir to be developed by Ancala portfolio company, Portsmouth Water
• Funds managed by Ancala Partners investing additional £150 million of equity to finance the reservoir, which will commission in 2029
• Portsmouth Water signs key contracts ahead of construction commencing on scheme that will provide essential water supplies to South East England

Ancala Partners, the experienced investor in critical infrastructure, is pleased to announce that its portfolio company, Portsmouth Water, has awarded a £167 million contract to Future Water MJJV Limited to build the flagship Havant Thicket Reservoir and a £41 million contract to Ward & Burke Construction Limited for a tunnelled pipeline in the water-stressed region of southern Hampshire. This follows approval of planning permission for the reservoir, and Ofwat, the economic regulator for water companies in England and Wales, agreeing to move forward with the project.

The reservoir will be the first major new water storage reservoir in the UK since the 1980s, and has been enabled by an innovative financial, regulatory, and commercial partnership between Portsmouth Water and key project stakeholders. This includes agreeing a unique long-term bulk supply agreement with neighbouring water company, Southern Water, with the support of Ofwat, to enable the reliable delivery of 21 million litres of water a day. In addition, Ancala is supporting Portsmouth Water to secure a £280 million financing package to support the construction of the Havant Thicket Reservoir. The financing package includes £205 million of innovative ESG performance-linked financing placing Portsmouth Water among a small leading group of utilities across Europe that are actively integrating ESG metrics into their financing strategy.

Once completed in 2029, the reservoir will hold approximately 8.7 billion litres of water. Alongside protecting environmentally sensitive chalk streams – the River Test and the River Itchen – the project will provide a new green leisure facility to benefit local communities and wildlife. There will be a new wetland to support local bird species, footpaths for walking, cycling and horse riding, facilities for bird watching, such as bird hides, and picnic and play areas.

Ofwat recently published its final d ecision to approve a revised budget for the Havant Thicket Reservoir. This has enabled Portsmouth Water to award the two main design and construction contracts for the project, with further contracts, including for a new visitor centre at the reservoir, to be awarded in the coming years. Lee Mellor, Partner at Ancala commented: “The Havant Thicket Reservoir is a critical step water security in the South East of England, and will generate significant to enhance environmental benefits for decades to come. We are delighted to support the project through £150 million of further investment in Portsmouth Water and are grateful to the company’s management team, as well as the collaboration of Ofwat, customers and Southern Water, for their hard work, partnership, a in developing this exciting project.

Ancala focuses on proprietary investments in critical mind support market infrastructure where we can add meaningful operational value. We are pleased to have worked closely with Bob and the team at Portsmouth Water over a number of years to solve complex operational, financial and regulatory challenges to progress this vital project.”

Bob Taylor, Chief Executive Officer at Portsmouth Water, said Havant Thicket Res: “This is a major milestone for the Thicket Reservoir project and for Portsmouth Water. The reservoir will safeguard essential water supplies and protect worldrenowned chalk streams the River Test and the River Itchen. Ancala’s continued financial and operational support has been crucial to enabling this major project.”

Source: Ancala