China buys into Thames Water

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China buys into Thames Water

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China’s sovereign wealth fund has bought a minority stake in London water supplier Thames Water.

China Investment Corporation said it had bought 8.7 percent of Thames Water from a group of investors led by Australia’s top investment bank Macquarie.

Thames Water has been seeking major investors as it embarks on a huge effort to overhaul parts of Britain’s ageing water supply system.

The Abu Dhabi Investment Authority acquired a 9.9 percent stake in the company in December.

The deal is an early sign that concerted efforts to drum up foreign investment in Britain’s ailing economy may be paying dividends.

British finance minister George Osborne has been in Asia this week and Prime Minister David Cameron recently visited Saudi Arabia as part of a drive to lessen dependence on a bruised UK banking industry and trade with the crisis-hit eurozone.

Osborne, who is looking to boost investment in British infrastructure as a way of lifting the British economy out of the doldrums, welcomed the announcement.

“It is a vote of confidence in Britain as a place to invest and do business,” he said. “This investment is good news for both the British and Chinese economies.”

For CIC, the deal gives it access to the stable returns offered by British water companies.

China has made no secret of its interest in buying plum European assets as the eurozone grapples with a debt crisis and countries such as Britain struggle to reduce ballooning deficits.

Lou Jiwei, the chairman of the CIC, has previously said China is keen to invest in outdated infrastructure in Western countries, especially Britain.

State-owned China Three Gorges last year signed a deal to buy a stake in top Portuguese utility EDP and Chinese state shipping firm COSCO invested in Greece’s biggest port in Piraeus in 2006.