A consortium led by Germany's Allianz has reached an agreement to acquire 100 per cent of the equity interest in Affinity Water, the largest water-only supply company in the UK.

Allianz Group, which boasts a 36.6 per cent stake in the consortium, said its other parners are DIF (26.9 per cent) and HICL, managed by InfraRed Capital Partners (36.6 per cent).

The consortium members have signed an agreement to acquire from Infracapital and Morgan Stanley Infrastructure a 100 per cent equity interest in Affinity Water Acquisitions (Investments) Limited, indirect owner of 90 per cent of Affinity Water for a consideration of £687 million, together with rights to acquire Veolia Water UK Limited’s 10 percent indirect stake in Affinity Water, said a statement from Allianz.

Affinity Water is the sole supplier of drinking water in these areas. It supplies, on average, 900 million litres of water a day to over 3.6 million people, serving 1.5 million homes and businesses, together with operating 98 water treatment works.

Affinity Water is licensed under the Water Industry Act 1991 and regulated by Ofwat. It owns and manages the water assets and network in an area of approximately 4,500 square km, split over three regions, comprising eight separate water resource zones, in the southeast of England.

"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

Announcing the acquisition, Christian Fingerle, the chief investment officer, Allianz Capital Partners, said: "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."

"This investment will 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," he added.-TradeArabia News Service