Australia’s richest man, James Packer, has beaten Goldman Sachs to a stake in one of Britain’s last available water assets, Southern Water Capital, which was sold yesterday for £4.15 billion ($9.45 billion). Mr Packer revealed yesterday that Challenger Infrastructure Fund (CIF) - the infrastructure arm of his listed financial services vehicle was part of a winning consortium for the water and sewerage group, which was put up for sale by Royal Bank of Scotland earlier this year. Southern Water supplies parts of Kent, Sussex, Hampshire and the Isle of Wight. CIF will become the second largest shareholder in Southern Water, holding a 27 per cent stake, worth $690 million, on an EBITDA multiple of 9.2 times, behind JP Morgan Asset Management Infrastructure Investments Group, which has 32 per cent. The runner-up was Goldman Sachs, which lost out on price. Mr Packer joins a long list of Australian investors buying British water assets. These include Westpac, which owns two water assets in Britain, Kent Water and South East Water; Macquarie Bank’s purchase of Thames Water for £8 billion; and IFM, which joined Colonial First State and a Canadian pension fund to buy Anglia Water for $5.5 billion last year. CIF chief executive Steve Bickerton told The Australian the asset would provide a cornerstone investment for the fund. CIF also has stakes in British gas and electricity utility Inexus, some stakes in British gas distributors and a holding in British broadcasting services provider Arqiva. In April, Challenger added the owner of bulk liquid European storage company LBC Group to its balance sheet, bringing its total property and infrastructure assets under management to about $3.5 billion. Mr Bickerton said Southern Water would make up 37 per cent of CIF’s portfolio. He said CIF would consider recycling existing assets that no longer had as much relevance to its model. It is believed to be considering selling its 7 per cent stake in Northern Gas and its 7 per cent stake in Wales & West, both of which are minority interests. Mr Bickerton said there was great interest in water assets in Britain because they were fully privatised, fully transparent and have a stable regulatory environment. “They are easily understood and so it will provide a good cornerstone investment to the business,” he said. Mr Bickerton said the group still had “headroom” to make other acquisitions, given it didn’t have to raise capital as part of the purchase of Southern Water process. CIF will fund the deal through $494 million in debt and the issue of £97.9 million in redeemable preference securities to its parent, Challenger Financial Services Group Ltd, part of James Packer’s Consolidated Press Holdings. Packer has 21 per cent of Challenger, which has specialist funds under management, including infrastructure and property, holding assets worth more than $3.5 billion. Challenger wants to increase that number to more than $10 billion by 2010. Southern Water is the fastest-growing of the 10 water and sewerage companies in Britain, with about 100 water treatment works and 370 sewerage treatment works supplying water to more than 2.3 million people and providing waste-water services to about 4.3 million people. CIF remains on track to deliver a distribution of 34c per unit for the year to June 30, 2008, and reaffirmed its medium-term forecast distribution growth guidance of 5 per cent a year.