South Staffordshire Water was on Monday sold for £400m by Arcapita, the Bahrain-based investment group, to Alinda, a US infrastructure fund. Arcapita, which also owns Northern Irish electricity supplier Viridian, bought South Staffordshire Water in November 2004 for £245m ($504m). The group did not disclose the terms of its deal with Alinda on Monday, but people close to Arcapita said the water assets had been sold for about £400m. The deal is the latest in a series of sales in the UK water sector. This month Royal Bank of Scotland sold Southern Water to a consortium led by Australia’s Challenger Infrastructure Fund and JPMorgan Asset Management for £4.2bn, a 30 per cent premium to its regulated asset value. Analysts said that both the South Staffordshire and the Southern Water deals showed that infrastructure fund and pension fund investors’ appetite for water assets had not been diminished by the credit squeeze. One analyst said there would be more water deals in the near term, with Kelda, Yorkshire Water’s owner, and Northumbrian Water the most likely targets. South Staffordshire Water supplies water to 1.25m people in the Midlands. As well as this regulated water business, South Staffordshire Water owns several non-regulated subsidiaries including Hydrosave, which specialises in leak detection, and Aqua Direct, a bottled water and watercooler business. The group employs about 1,400 people and in the past financial year generated £120m of revenues and £27m of operating profit.

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