China buys nearly 9 percent stake in Thames Water

LONDON, UK – China Investment Corporation (CIC), the country’s sovereign wealth fund, has bought nearly 9 percent of Britain’s biggest water firm, the BBC has reported, just days after UK Finance Minister George Osborne’s visit to Beijing.

CIC has acquired an 8.68 percent stake in Kemble Water, a consortium of investors led by top Australian bank Macquarie.

Kemble Water owns the utility company Thames Water, which serves about 14 million customers.

Osborne welcomed the move, Sky News reported, calling China’s investment “good news for both the British and Chines economies” and “a vote of confidence in Britain as a place to invest and do business.”

The buy represents CIC’s first major share purchase in the UK. The wealth fund was established in 2007 to invest some of China’s $3.18 trillion in foreign exchange reserves.

CIC declined to disclose a purchase price, but analysts say the probable value of the deal ranged between $0.9 billion and $1.1 billion, according to Reuters.

Thames Water has been looking to bring in major investors as its sets out on a $7.7 billion investment program, part of a wider effort to revamp Britain’s ageing water and wastewater supply system.

Last month, another huge sovereign wealth fund, the Abu Dhabi Investment Authority, bought nearly 10 percent in the company. 

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CIC chairman Lou Jiwei, who recently indicated his company’s interest in investing in outdated infrastructure in western countries, met with Osborne during the minister’s visit to China, aimed at boosting investment in British infrastructure, Sky News reported.

Earlier this week Osborne also announced that Britain had reached an agreement with Hong Kong to turn the City of London into a major offshore trading centre for China’s currency, the yuan.

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