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AMP Capital has reached financial close on a deal to acquire a 5.2 per cent stake in the Victorian Desalination Project (VDP) from Pacific Partnerships.

The acquisition is funded by the AMP Capital Community Infrastructure Fund (CommIF).

VDP was delivered as a public private partnership (PPP) and is the largest desalination plant in the Southern Hemisphere. It is a rainfall-independent source of drinking water and capable of supplying up to 150 billion litres a year. This is approximately one third of Melbourne's annual water consumption.

The project is a $3.5 billion capital investment between the Victorian Government and AquaSure, the company contracted to finance, design, construct, operate and maintain the project for 30 years. There are 23 years remaining to the end of the concession.

The scope of the project includes the construction and operation of the desalination plant, the 84-kilometre transfer pipeline to connect the plant to Melbourne’s existing water supplies, delivery of power supply for the project, operations and maintenance, and the purchase of renewable energy credits. The plant was successfully commissioned in December 2012.

AMP Capital Community Infrastructure Fund Manager Andrea McElhinney said: “We are delighted to invest in one of Australia’s largest PPPs with a world-class design that provides high-quality water to the Melbourne network. The asset also delivers stable, long-term monthly service payments from the Victorian Government to our investors. This latest acquisition will increase CommIF’s exposure to the water sector as it will sit alongside existing water assets such as Riverland Water and AquaTower.

“CommIF has experienced significant growth since AMP Capital acquired the fund in 2010 from the Royal Bank of Scotland, with the net asset value growing from approximately $55 million in September 2010 to more than $500 million in October 2016. We are extremely proud of CommIF’s achievements and success in the secondary social infrastructure market, providing investors with a diversified portfolio of existing operational assets that deliver immediate yield. We look forward to continuing this momentum by working with state governments and key stakeholders to deliver value-for-money projects that benefit the community.”