CPP joins group bidding 2.2 billion pounds for U.K. water utility AWG PLC

In addition to 3i and the CPP Investment Board, the Osprey group includes two Australian institutions: Colonial First State of Sydney, a division of Commonwealth Bank of Australia, and Industry Funds Management of Melbourne.

CPP says the bid supports its overall infrastructure investments strategy, which looks to acquire assets with reasonable low-volatility, low risk, and long-term and stable cash flows.

"A U.K. water distribution business, like AWG, is right down the middle of the fairway in terms of that strategy," said Mark Wiseman, the CPP Investment Board's senior vice-president of private investments.

"We're highly confident that this is an excellent company to try to acquire," he added, because in addition to a predictable return, it also has inflation-linked characteristics - which means the return is positively correlated to inflation.

The U.K. water venture follows a US$350-million investment in Chilean electricity transmission company Transelec Chile in June by the CPP Investment Board, which like other large institutional investors has expressed concern about a lack of large infrastructure investment opportunities in Canada.

"The U.K., for infrastructure, has a very long-standing and stable regulatory environment," Wiseman said. "It's one of the reasons why we're particularly interested in this investment in the U.K."

The CPP Investment Board deploys funds not needed to pay current benefits from the Canada Pension Plan, which has assets totalling C$98.6 billion including $5.7 billion in private equity and infrastructure holdings.

AWG shares rose about 2.5 per cent on the London Stock Exchange.

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