Fund manager Dalmore Capital and GLIL Infrastructure have partnered to buy a 15% stake in Anglian Water Group (AWG) from 3i Infrastructure.
3i is expected to receive gross proceeds of £395m (€447.7m). This compares to a valuation of £288m at 30 September.
Dalmore and GLIL, a joint venture of UK council pension funds, have agreed the acquisition on a 50:50 basis.
This investment is part of Dalmore and GLIL’s strategy to invest in UK infrastructure assets, reflecting their shared investment philosophies, which are based upon long-term investment in low volatility growth assets in the UK.
The firms are backed by pension funds, insurance companies and other long-term investors.
AWG manages water and water recycling services in the East of England and Hartlepool.
Its network includes thousands of kilometres of water mains and sewers, and over 1,000 water recycling centres and water treatment works.
Michael Ryan, chief executive of Dalmore Capital said: “AWG is an excellent fit within our core investment strategy, which targets UK infrastructure businesses that deliver long-term predictable inflation-linked cash flows, with robust cash yield.
“At a time when regulators are challenging investors on returns, we are delighted to be investing in one of the best performing and best run UK water companies.”
Kieran Quinn, chairman of Greater Manchester Pension Fund said: “GLIL was formed to enable UK Local Government pension funds to seek strong opportunities to invest in essential UK infrastructure assets and we are delighted to be acquiring such an exceptionally well-run company, meeting our strict investment criteria.”
Subject to conditions, the sale is expected to be completed in early 2018.
Originally launched in April 2015, GLIL is a £1.27bn infrastructure investment joint-venture between the London Pensions Fund Authority, Greater Manchester Pension Fund, Merseyside Pension Fund, West Yorkshire Pension Fund and Lancashire County Pension Fund.