(Adds details around the deal, background, advisers)
By Esha Vaish
May 2 A consortium that includes German insurer
Allianz and HICL Infrastructure is to buy
Affinity Water Ltd, the largest water-only supply
firm in England and Wales by revenue, through two transactions.
The consortium will acquire a 90 percent stake from Morgan
Stanley Infrastructure and M&G Investments'
Infracapital for 687 million pounds ($884 million), and the rest
from water company Veolia, the sellers said.
The deal is the latest acquisition of British infrastructure
by overseas investors, as pension schemes, sovereign wealth
funds and others look to take advantage of stable returns.
Last month, a consortium of Canadian and Kuwaiti investors
agreed to buy a minority stake in Thames Water, Britain's
largest water firm, from funds managed by Macquarie.
Under the terms of Tuesday's deal, British infrastructure
investment firm HICL and Allianz will each take an about 36.6
percent stake in Affinity, while the third member of their
consortium, fund manager DIF, will acquire the remaining stake.
HICL said it would pay 269 million pounds for its stake,
giving the entire deal an equity value of about 735 million
pounds. Affinity had net debt of 854.3 million pounds as of
Sept. 30, 2016.(bit.ly/2pBgIYN)
Both transactions are expected to complete this month.
Morgan Stanley and Infracapital formed Affinity Water
through the purchase of Veolia Water's British water supply
operations in June 2012 for 1.1 billion pounds.
Affinity's shareholders began a strategic review of the
business on March 14, but no formal auction sales process was
HICL said the deal was in line with its strategy to buy
low-risk infrastructure investment assets that produce long-term
income and would be accretive to its existing portfolio in terms
of total returns.
Its shares were down 2 percent at 170.8 pence at 1329 GMT,
making it one of the top percentage losers on London's midcap
Affinity supplies water to 1.5 million homes and businesses
and maintains water supply infrastructure. It had a regulatory
capital value - a key industry metric - of 1.156 billion pounds
as of March 31.
The company said it did not expect the sale to result in any
Nomura was adviser to the consortium, while Citi acted
as financial advisor to Infracapital and Morgan Stanley
($1 = 0.7768 pounds)
(Reporting by Esha Vaish in Bengaluru; Editing by Mark Potter
and Jane Merriman)