(Adds detail)

By Anjuli Davies

LONDON, May 15 (Reuters) - Severn Trent SVT.L rejected a preliminary takeover offer from a consortium including Borealis infrastructure and the Kuwait Investment Office, saying the offer undervalued the British water company.

The board of the FTSE 100 company, which supplies 7.7 million people in Britain with drinking water, did not disclose details of the price offered but said it was only "at a modest premium to the share price before the announcement on 14 May".

The water company announced on Tuesday that it had received the takeover approach from the consortium, which also includes Britain's Universities Superannuation Scheme, after magazine Financial News reported that it could be the target of a 5.3 billion pound ($8.09 billion) offer.

News of the potential bid sent its shares soaring as much as 19 percent to a record 2,170 pence before they closed at 2,077 pence, valuing the company at more than 5 billion pounds.

Representatives of the consortium and Severn Trent met on Tuesday.

"The board of Severn Trent has reviewed the proposal with its advisers and concluded that it completely fails to recognise the existing and potential value of Severn Trent," the company said.

Broker Liberum, in a note to analysts, said it was likely the consortium would make a further offer before a June 11 deadline.

"We have seen many such bids in the past decade and no bidder has ever given up after just one offer. Nevertheless ... the reported price did seem high especially given where we are in the regulatory cycle."

($1 = 0.6554 British pounds)

(Reporting By Anjuli Davies; editing by Kylie MacLellan and Tom Pfeiffer)

((anjuli.davies@thomsonreuters.com)(+44 207 542 6670))

Keywords: SEVERN TRENT/