AMP Capital yesterday announced it is acquiring 100 % of AquaTower from two subsidiaries of Hong Kong-based conglomerate Cheung Kong Holdings; CK Life Sciences International Holdings, which holds 51 %, and Cheung Kong Infrastructure Holdings, which holds the remaining 49 %.

The AMP Capital Community Infrastructure Fund (CommIF) will take a 51 % stake in AquaTower while the AMP Capital Core Infrastructure Fund (CIF) will hold the remaining 49 %.

AquaTower owns and operates four water treatment plants in the regional Victorian towns of Ararat, Great Western, Halls Gap and Stawell under a contract with Grampians Wimmera Mallee Water (GWMWater). The plants have been operating since 2002 and currently process approximately 2,400 mega litres each year for 13,100 users. Upon acquisition, water utility service provider TRILITY (formerly United Utilities Australia) will take over the operations and maintenance of AquaTower. TRILITY has a strong strategic relationship with AMP Capital and currently operates and maintains its other water asset, Murray River-based Riverland Water.

AMP Capital Head of Infrastructure for Australia and New Zealand Paul Foster welcomed the acquisition, which follows significant investment this year across AMP Capital's broader portfolio, and noted the increased momentum in social infrastructure investment. Mr Foster said:

"Investors in social infrastructure are attracted to the asset class because it can provide long duration, inflation-linked, high yielding investment returns at lower levels of volatility than traditional asset classes whilst offering a significant community benefit. More institutional and individual investors are seeking opportunities that offer both attractive returns and generate real benefits to society."

"Interest has also been bolstered by growing investor confidence in the Public Private Partnership (PPP) market and the entrenchment of PPPs as the preferred procurement method for a range of developments from schools to hospitals to prisons and even large-scale projects such as the renewal of the Sydney Convention Centre. This gives investors more opportunities to boost their social infrastructure allocation or access the asset class for the first time."

CommIF has completed three deals in 2013 worth $525 million in enterprise value, which incorporates the value of the equity and debt, and including the acquisition of the Partnerships in Victoria Schools Project late last month. AquaTower is the second water asset for CommIF after the fund acquired 50 % of Riverland Water in June 2011.

CIF invests globally across the complete spectrum of core infrastructure assets and uses social infrastructure assets to enhance diversification within the portfolio. The fund co-invested with CommIF on the purchase of the South Australian Schools PPP project in May 2012. CIF already holds water assets via an investment in Thames Water in the UK and is seeking to further broaden its exposure through the acquisition of AquaTower.

Mr Foster said:

"AMP Capital is one of the leading global players in infrastructure investment having completed 11 acquisitions, totalling more than A$1 billion of equity, in Australia, New Zealand, the US, the UK, Continental Europe and the Republic of Ireland during the last 12 months. We are well placed to take advantage of the growing interest across all sectors and geographies within the infrastructure asset class, including social infrastructure."

"We expect governments in Australia and globally to continue repackaging their existing assets and creating environments conducive to the investment of private and public sector capital into infrastructure, ensuring a robust environment for infrastructure investment into 2014 and beyond."

The deal is subject to the consent of GWMWater.