United Utilities, the FTSE 100 water company, is reviewing a key division of its business, which could lead to a sale worth over £800m later this year.
The UK's biggest listed water business is looking to sell assets not regulated by Ofwat, such as outsourcing contracts both in the UK and abroad. These include a meter installation contract with British Gas Trading, a water facilities upgrading contract in Townsville, Australia, as well as operations in Bulgaria, Estonia, Poland, and the Philippines.
A City banker said: "There could be a sale process as early as September, with the assets fetching more than £800m. But the business is patchy, with many different contracts in different areas, so it could be broken up."
However, a senior utilities adviser said £800m would be "toppy" for the business. The reason for the sale now is not clear, but chief executive Philip Green (left) has previously made sales to clean up the business and return cash to shareholders. In 2007, he sold United's electricity distribution assets to North West Electricity Networks, which provided the bulk of the £1.5bn cash returned to investors in 2008.
United operates water, wastewater, electricity and gas throughout the North-west of the UK, and handles about 60 per cent of outsourced UK utility markets.
JP Morgan Cazenove and Deutsche are joint corporate brokers to United Utilities, which closed at 494.75p on Friday, down 5.75p on the start of trading, valuing the company at around £3.4bn. In the year to March 2009, United Utilities made a pre-tax profit of £529.8m, up 11 per cent on the previous year, with revenues only slightly up at £2.4bn.
A spokesman for United Utilities declined to comment.