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 company is the sole supplier of drinking water in these areas. Affinity Water supplies, on average, 900 million liters of water a day to over 3.6 million people, serving 1.5 million homes and businesses, together with operating 98 water treatment works.
The consortium is comprised of long-term infrastructure investors Allianz Capital Partners on behalf of the Allianz Group (36.6 percent), DIF (26.9 percent) and HICL, managed by InfraRed Capital Partners (36.6 percent). The consortium members have signed an agreement to acquire from Infracapital and Morgan Stanley Infrastructure a 100 percent equity interest in Affinity Water Acquisitions (Investments) Limited, indirect owner of 90 percent 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.
"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 Christian Fingerle, Chief Investment Officer, Allianz Capital Partners. "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."
The transaction is expected to be completed by the end of May.