GLOBAL - Canada's Ontario Teachers' Pension Plan Board (OTPP) plans to sell its holdings in UK water company Northumbrian Water Group, but stressed it was still seeking to increase its allocation to infrastructure.

Northumbrian Water agreed to the deal with Cheung Kong Holding after it received approval from OTPP, its main shareholder.

The water company, which is currently 26.8% owned by the Canadian pension fund, said it would recommend that shareholders accept a £2.4bn (€2.8bn) takeover from the Hong Kong-based firm and its subsidiaries.

A spokesperson from OTPP told IPE: "Infrastructure still remains an important asset class for us, and utility companies are one of the main components of our portfolio."

According to several analysts, the sale of OTPP's stake in Northumbrian Water is merely the result of a high pricing offered by Cheung Kong.

According to reports, OTPP would be likely to receive 198 pence per share.

OTPP bought a 25% stake in the water company back in 2005 as part of its plan to invest in regulated utility companies.

Sticking to its strategy, the pension fund last month increased its interests in two water firms in Chile, Essbio - from 51.1% to 89.6% - and Esval - from 69.8% to 94.2%.

OTPP acquired the two water utility companies back in 2007 and touted Chile as a stable political environment with a mature regulatory framework.