Santander is one of the Thames Water sellers to CIC

The private equity arm of the Spanish bank together with Portuguese fund Finpro were the main sellers of an 8.68% stake in Thames Water, the UK’s largest water utility, to the China Investment Corporation. The deal is thought to be worth at least £500m.

Santander Private Equity, part of Spanish bank Santander, and Portuguese investment fund Finpro, which targets infrastructure and private equity opportunities, were the main sellers of an 8.68 percent stake in Thames Water last week to the China Investment Corporation (CIC), sources familiar with the sale told Infrastructure Investor.
 
In a short statement last week, CIC, a $410 billion sovereign wealth fund, said that it had, “through one of its wholly-owned subsidiaries, acquired an 8.68 percent stake in Thames Water,” but did not disclose any other details about the transaction, including the seller or the purchase price. Thames Water’s largest shareholder is Macquarie, with just under 40 percent of the company.
 
Analysts and pundits are divided on how much CIC paid for the minority stake in Thames Water. Dominic Nash, utilities analyst at Liberum Capital, told UK newspaper The Telegraph that the stake could be worth about £500 million (€602 million; $778 million), in line with a 25 percent premium paid to Thames Water’s regulated asset base (RAB) – a premium paid in similar deals. But the Financial Times, in its Lex column, speculated CIC could have paid up to £1 billion for the holding.
 
According to water regulator Ofwat, Thames Water’s RAB for 2011-2012 amounts to £9.6 billion. The utility – the UK’s largest – provides water to close to nine million people in London and the Thames Valley and offers sewerage services to 14 million customers.
 
Last December, the Abu Dhabi Investment Authority (ADIA), a Middle East sovereign wealth fund, bought 9.9 percent of Thames Water from Macquarie for an undisclosed amount. And further sales in Thames Water could be in the offing. 
 
New Zealand-based fund manager Equity Partners Infrastructure Company (EPIC) announced last summer that it had entered into “formal discussions” to sell its 1.24 percent stake in Thames Water. According to market sources, EPIC was not a seller to CIC. 
 
Macquarie led the Kemble Water Holdings consortium that acquired Thames Water in December 2006 for £8 billion from German utility RWE. At the time of acquisition, Kemble Water included the likes of AMP Capital, Santander Private Equity, Dutch pension ABP, Alberta Investment Management and Queensland Investment Corporation, to name just a few of the consortium's members. 
 
UK water utilities have proven popular with Chinese investors. Last August, Hong Kong’s Cheung Kong Infrastructure spent £2.4 billion buying Northumbrian Water. The infrastructure arm of business tycoon Li Ka-shing also owns 4.75 percent of Southern Water and used to own 100 percent of Cambridge Water, which it was forced to sell after it acquired Northumbrian Water to avoid breaching UK competition law.