UPDATED:China wealth fund acquires 8.68% stake in Thames Water

China Investment Corporation (CIC) has acquired an 8.68% stake in UK utility company Thames Water, it was announced today (January 20).

China's $410bn sovereign wealth fund confirmed in a one-line statement that it had made the acquisition through one of its wholly-owned subsidiaries, marking its first UK acquisition. No details were provided on the sale value of the stake.

The deal is thought to be the result of investment talks by British politicians, including chancellor George Osborne, who visited China earlier this week to encourage China to invest in British infrastructure projects.

Thames Water is currently held by holding company Kemble Water, which acquired the company in 2006. It is also owned by a consortium of investors, with the biggest share owned by Macquarie.

Meanwhile, investment in the utility is managed by the Australian bank.

A Thames Water spokesperson confirmed to edieWater that the sale had been agreed, but that it had no further information to add at this time.

This latest development in Thames Water follows the release of the Government's Water White Paper last month (December 8 2011), which sets out plans to stimulate investment in the industry.

International law firm Eversheds head of water regulation Clive Mottram, said the news can be seen as "yet more evidence of the attractiveness of the UK water sector to investors", adding that it demonstrates how the 'Water for Life' paper has "successfully calmed water investors' fears that regulatory change might reduce the sector's attractiveness as a safe long-term return based on asset-intensive operations".

He added: "Indeed, the timing of this acquisition perhaps suggests that the White Paper has provided a stimulus for investment, ahead of possible relaxation of merger controls which might allow greater consolidation of water businesses."

Carys Matthews



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