An article in this morning’s South China Post says that Chinese companies are increasingly pursuing investment opportunities in big British infrastructure projects – including the water and wastewater sector.

According to the story, David Percival, international business development director at Deloitte China believes that there will “probably be a big increase in Chinese investment in British infrastructure this year,” with one or two large deals leading to double-digit growth in Chinese infrastructure investment in the UK.

The article says that the UK has opened its doors to investors from China to meet an investment requirement of £400 billion [HK$4.77 trillion] of in infrastructure by 2020 in sectors which include water and wastewater treatment, airports, renewable energy, oil and gas, railway and nuclear projects.

The story also refers to a recent visit to the UK hosted by leading law firm Pinsent Masons of a delegation from the China International Contractors Association which expressed an interest in the proposed £4.1 billion Thames Water Tideway Tunnel.

In December 2011 Phil Stride, head of London Tideway Tunnels said that Thames Water would be looking for bids from contractors as far afield as China or Singapore when the Thames Tunnel project is put out to tender and that accessing Asian tunnelling expertise could help to keep the costs of the project down.

In April last year Waterbriefing reported that Mr Stride had also met with key staff from Chinese investment funds to discuss the possibility of them buying a stake in the project. At the time he said that the projects would attract bids from all over the world.

The news followed the purchase of a 9 per cent stake in Macquarie Group, owner of Thames Water, by the China Investment Corporation in January 2012. In January 2012 Chancellor of the Exchequer, Rt Hon George Osborne MP called for more investment by Asian companies in UK infrastructure during an official visit to Asia which included Hong Kong, Beijing and Tokyo, commenting:

“We have got to do more if we are to be the home of Asian investment in Europe. The British Government needs to roll up its sleeves and make it happen.”

The story in the South China Morning Post quotes Shourav Lahiri, a partner at Pinsent Masons, who says that “UK contractors are expressing strong interest in exploring tie-ups with potential Chinese investors and contractors”.

The article says that over the past five years 39 per cent - or £3.6 billion - of Chinese investment in British infrastructure has been in the water and wastewater sector.

In October 2011 UK Water (2011) Limited, which is indirectly wholly-owned by a consortium of Cheung Kong Infrastructure Holdings Limited, Cheung Kong (Holdings) Limited and Li Ka Shing Foundation Limited completed the acquisition of Northumbrian Water Group for a cash consideration of around £2.4 billion - one of the largest ever Asian investments in UK infrastructure.