Allianz-led Consortium Buys British Water Utility Affinity

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Allianz-led Consortium Buys British Water Utility Affinity

A consortium led by Germany's Allianz has agreed to buy a 90 percent stake in British water utility Affinity Water from Infracapital and Morgan Stanley Infrastructure for £687 million ($884 million).

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The consortium of Allianz Capital Partners – on behalf of the Allianz Group (36.6%), DIF (26.9%), and HICL, managed by InfraRed Capital Partners (36.6%) – will take control of Affinity.

Infracapital and Morgan Stanley Infrastructure are selling the interest.

“The UK water sector offers a well-established and transparent regulatory framework that provides Allianz good visibility and a fair return on its investment,” said Christian Fingerle, chief investment officer at Allianz Capital Partners.

“The investment in Affinity Water is another important step in our ambition to grow our portfolio of high-quality core infrastructure assets and it reaffirms our comfort with the UK as a stable jurisdiction in which to invest capital.”

Fingerle said the investment would deliver inflation-linked, stable and predictable cash-flows, “which are ideal for matching long-term payment obligations to the customers in Allianz’s core business of insurance”.

Affinity Water is the UK’s largest water-only supply company by revenue and population served.

* As part of the transaction, the buyers are also purchasing Veolia Water UK Ltd's 10 percent indirect stake in Affinity, they said

* The transaction is expected to be completed by the end of May

* Affinity Water owns and manages the water assets and network in an area of around 4,500 square kms in the southeast of England. It supplies 1.5 million homes and businesses.

* The buyer consortium comprises Allianz with a 36.6 percent stake, DIF with 26.9 percent and HICL, managed by InfraRed Capital Partners, with 36.6 percent.

* Citi acted as the financial advisor to Infracapital and MSI on the deal, with Clifford Chance LLP acting as legal advisor. ($1 = 0.7769 pounds)

Sources: Reuters and IPE Real Estate

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