DIF, HICL and Allianz acquire Affinity Water

Subscribe to our newsletter and get the latest news and business opportunities in your inbox
DIF, HICL and Allianz acquire Affinity Water

Aconsortium formed by DIF Infrastructure IV, HICL Infrastructure Company Limited and Allianz Capital Partners on behalf of Allianz Group has announce that it has reached agreement to acquire a 100% equity interest in the Affinity Water Group, the United Kingdom’s largest water only supply company.

The consortium members will acquire from Infracapital and Morgan Stanley Infrastructure Affinity Water Acquisitions (Investments) Limited, indirect owner of 90 percent of Affinity Water for a consideration of £687 million (US$890 million), together with rights to acquire Veolia Water UK Limited’s 10 percent indirect stake in Affinity Water. Morgan Stanley and Infracapital formed Affinity Water through the purchase of Veolia Water's UK water supply operations in June 2012.

HICL and Allianz both picked up a 36.6% stake in the business for £269 million (US$348 million) each, while DIF Infrastructure will take a 26.9% stake. The company also holds net debt of £854 million to bring the total deal value to £1.6 billion (US$2 billion).

DIF initiated the process and was subsequently joined by its consortium partners. The transaction is expected to complete in May 2017.

Affinity Water is the United Kingdom’s largest water only supply company by revenue and population served. It is licenced under the Water Industry Act 1991 and regulated by Ofwat. Affinity Water owns and manages the water assets and network in an area of approximately 4,515 km², split over three regions, comprising eight separate water resource zones, in the southeast of England. The company is the sole supplier of drinking water in these areas. Affinity Water 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.

InfraRed Capital Partners Limited advised HICL in the transaction. Tony Roper, Director at InfraRed Capital Partners Limited, said:

"InfraRed is delighted to have secured this £269m investment in Affinity Water, the largest water-only service company in England and Wales, for HICL. The investment is in line with HICL's stated acquisition strategy and supports the delivery of the Company's investment proposition to produce long-term income for shareholders from a portfolio of infrastructure investments positioned at the lower end of the risk spectrum.

The investment in Affinity Water will be accretive to the existing HICL portfolio in terms of total return, weighted average asset life and inflation correlation. We look forward to working with the management team and supporting them to continue to deliver a high quality service for Affinity Water's customers."

Share this news

Join us

In order to get full access to News section, you must have a full subscription. You can check all the benefits of becoming a member and purchase a subscription on our membership page.