Deutsche Bank fund arm puts Yorkshire Water stake up for sale, say sources

By Andres Gonzalez and Iain Withers

LONDON (Reuters) -Deutsche Bank's investments arm DWS is trying again to sell its stake in British water company Yorkshire Water, two sources said, betting that some recent regulatory clarity on UK water bills will help lure buyers.

DWS had previously tried to sell its 23% stake in Kelda Group, the owner of Yorkshire Water, including in 2017. Finding new investors in Britain's water sector has been particularly hard since Thames Water, the country's biggest supplier, nearly collapsed under the weight of an 18 billion pound ($24 billion) debt pile.

The German fund firm has recently held discussions with potential interested parties about selling its stake, one of the sources familiar with the matter said. Reuters could not establish the names of the parties.

DWS is also open to selling its stake alongside Corsair, which owns 30% of Kelda and has tried to sell in the past, to make any deal more attractive, as this would enable a buyer to take majority control, the source said. DWS is being advised by Deutsche Bank, the source added.

DWS, Deutsche Bank, Corsair and Yorkshire Water declined to comment.

The DWS stake could be worth hundreds of millions of pounds, the source said.

Investors have been wary of entering Britain's water sector due to a public backlash over repeated sewage spills and rising bills that operators say are needed to upgrade infrastructure.

However, British water regulator Ofwat provided some clarity in December, when it determined that water bills across England and Wales would rise by a little more than a third over five years to help fund investment.

Despite being a lower rise in bills than companies wanted, the Ofwat determination provided clarity on future revenues and has put the industry on a more sustainable footing, one of the sources said.

Yorkshire Water provides services to more than 5 million people and 100,000 businesses in northern England.

DWS first invested in Kelda in 2008 after it was delisted from the London Stock Exchange in a deal worth about 3 billion pounds. Kelda's other current investors are Singaporean sovereign wealth fund GIC and Australia's SAS Trustee Corporation.

($1 = 0.7486 pounds)

(Reporting by Andres Gonzalez and Iain WithersEditing by Tommy Reggiori Wilkes and Sharon Singleton)