EQT Sets Sights on UK Utility, Confidently Acquires Stake in Yorkshire Water

EQT Expands into UK Utilities with Major Stake in Yorkshire Water

EQT has taken a significant step into the UK's critical infrastructure sector by securing a 42% ownership in Kelda Group, the company behind Yorkshire Water. Announced on March 9, this acquisition is a deliberate, long-term commitment that fits within EQT’s Active Core Infrastructure approach. Rather than a short-term speculation, this move targets a regulated, cash-generating business with a clear focus on ongoing capital investment.

The timing of this transaction is notable, as it coincides with a broader movement among institutional investors toward private funding in essential utilities. This trend has been reinforced by recent regulatory changes, including the UK government’s updated white paper on water industry oversight, which has clarified the investment landscape and demonstrated a sustained commitment to modernizing national infrastructure.

Absolute Momentum Long-Only Strategy Overview

This strategy involves taking a long position in EQT when two conditions are met: the 252-day rate of change is positive and the closing price is above the 200-day simple moving average (SMA). Positions are exited if the closing price drops below the 200-day SMA, after 20 trading days, or if either an 8% gain (take-profit) or a 4% loss (stop-loss) occurs.

Strategy Entry and Exit Criteria

• Entry Signal: 252-day rate of change > 0 and closing price > 200-day SMA
• Exit Signal: Closing price < 200-day SMA, or after 20 trading days, or if take-profit (+8%) or stop-loss (−4%) is reached
• Asset: EQT
• Risk Controls:
  • Take-Profit: 8%
  • Stop-Loss: 4%
  • Maximum Holding Period: 20 days

Backtest Performance Summary

• Total Return: -14.25%
• Annualized Return: -5.03%
• Maximum Drawdown: 34.37%
• Profit-Loss Ratio: 1.3

Trade Statistics

• Total Trades: 22
• Winning Trades: 8
• Losing Trades: 14
• Win Rate: 36.36%
• Average Holding Period: 8.77 days
• Longest Losing Streak: 8 trades
• Average Gain per Winning Trade: 5.71%
• Average Loss per Losing Trade: 4.11%
• Largest Single Gain: 9.21%
• Largest Single Loss: 9.09%

Strategic Implications for EQT and Yorkshire Water

For EQT, this investment in Yorkshire Water provides direct access to favorable policy trends and a reliable income stream from a utility that serves about 5.5 million customers. The deal also involves participation in a planned £8.3 billion infrastructure upgrade through 2030, further enhancing the long-term value proposition.

This combination of regulatory support, stable cash flows, and significant planned investment offers an attractive risk-adjusted return profile for investors seeking both quality and transparency in their portfolios.