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Macquarie Bank leads consortium to buy Thames Water

A Macquarie Bank Ltd-led consortium has acquired the UK's largest water company Thames Water for 8 billion pounds ($A19.82 billion).

Macquarie is to invest approximately STG250 million ($A619.43 million) in the consortium for an 11 per cent stake, after sealing the deal with owner RWE Thames Water Holdings.

Thames Water is the UK's largest water and wastewater services company supplying over 8 million clients with drinking water and 13 million with sewerage services customers across London and the south east of England.

"A consortium led by Macquarie's European Infrastructure Funds has today signed a conditional agreement to acquire RWE Thames Water Holdings from RWE at an enterprise value of STG8 billion ($A19.82 billion," Macquarie said in a statement today.

The deal includes both Thames Water Utilities Ltd, the regulated entity and a number of non-regulated businesses including a 20 per cent stake in London Underground maintenance company Metronet.

The consortium comprises Macquarie's European Infrastructure Funds, Macquarie Bank Ltd and other investors who are committed to long-term investment in Thames Water, the investment bank said.

Macquarie defeated bids from the Qatar Investment Authority, British investment group Terra Firma and the Australian energy group Alinta.

"After adjusting for cash and non-regulated businesses, the acquisition implies a value for the regulated water business equal to 1.2 times the regulatory capital value, comparing favourably with recent transactions in the sector," Macquarie said.

"The transaction is conditional on the approval of the RWE Supervisory Board at a meeting scheduled for the weekend of October 21 and 22.

"Following approval, Macquarie will provide further information relating to the transaction and its ambitions and plans for this important business."

Thames Water owns 20,000 miles of water mains and 40,000 miles of sewers, has 100 water treatment works and 351 sewage treatment works.

A Macquarie-led consortium acquired US water utility Acquarion Co for $US860 million in February this year, and the investment bank also owns water utility South East Water in the UK.

Macquarie Bank shares were up 92 cents or 1.3 per cent to $71.42 at 1019 AEST today and Alinta shares were unchanged at $11.01.

AAP