Kelda receives £3.8bn bid approach

Confirmation of the offer, which includes an interim dividend payment, sent Kelda's shares soaring. The price, which has risen 11 per cent in the last year, jumped 128p or 14 per cent to £10.65.

Water companies have become increasingly attractive to investors because of their regulated and long-term income streams.

Last month a consortium led by a JP Morgan infrastructure fund bought Southern Water for £4.2bn, beating rivals Goldman Sachs and Morgan Stanley to clinch the deal. Macquarie, the Australian bank, paid £8bn for Thames Water last year.

Kelda, which trades under the Yorkshire Water name, provides water and waste water services to more than 4.7m people and 140,000 businesses.

Last year it reported sales of £741m and an operating profit of £332.7m. Based in Bradford it employs 2,198 and was due to release interim results next week.

GIC, a Singaporean investment fund company, and Infracapital Partners, the infrastructure fund of Prudential, the insurance group, are also part of the consortium.

Greenhill & Co and Merrill Lynch are acting as joint financial advisers to Kelda. JPMorgan Cazenove is acting as corporate broker.