The Abu Dhabi Investment Authority (Adia), one of the world's largest sovereign wealth funds, has acquired a 9.9 per cent stake in Britain's biggest water utility.
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Infinity Investments, an Adia subsidiary, bought the stake in Kemble Water Holdings, the parent of Thames Water.
The sellers were funds managed by Macquarie Group, Australia's biggest investment bank. The price was not disclosed in a Macquarie statement announcing the transfer.
The purchase represents another addition to Adia's infrastructure holdings, which have recently grown to include a 15 per cent stake in the UK's Gatwick Airport and a minority holding in Australia's Port of Brisbane.
Adia was also reported to be part of a consortium bidding for the UK power network of Électricité de France in 2009, although that deal did not occur.
Sovereign wealth funds across the globe are increasingly targeting investments in utilities and other infrastructure assets as returns in stock and bond markets slump.
Adia, which invests Abu Dhabi's surplus oil revenues abroad, is estimated to have assets worth more than US$300 billion (Dh1.1 trillion). It has a benchmark range of 1 to 5 per cent of its assets invested in infrastructure, according to its website.
"This isn't a surprising thing for me, especially seeing as they have been looking at British infrastructure," said Victoria Barbary, the head of Dhana Advisory, a research firm based in London. "It's also something our government is looking to encourage, actively going out and trying to woo sovereign wealth funds, particularly in the Gulf."
Thames Water, which has a history dating to the 1600s, was privatised in the 1980s and has since changed hands twice, first going to a German utility before being taken over by a consortium led by Macquarie in 2006.
