A group led by JP Morgan has agreed to buy Southern Water from its owner the Royal Bank of Scotland in a deal which values the firm at £4.2bn ($8.5bn).
Water firms offer steady earnings in any economic climate
JP Morgan teamed up with an Australian infrastructure fund called Challenger and others to bid for the UK water firm that supplies Kent and Sussex.
The bid is thought to have beaten one from Goldman Sachs.
The deal comes a day after RBS won its takeover battle to buy Dutch bank ABN Amro when Barclays abandoned its bid.
It will see the JP Morgan fund take a 32% stake in Southern Water, with Challenger Infrastructure paying for a 27% shareholding.
The other investors in the consortium, called Greensands, include UBS, Hermes and seven Australian pension funds.
Phil Peters, an executive director at Challenger, said Southern Water had the "highest growth profile in the sector".
He also promised to support the company's management implement a £1.6bn investment programme for its current regulatory period, that runs until 2010.
The purchase comes as the market for mergers has practically dried up. Banks are no longer willing to lend as freely or as cheaply to help finance takeovers in the wake of the US housing slump and higher borrowing costs.
Analysts say the deal is a sign of the growing interest in utility companies, particularly from pension funds and private equity firms, because of their steady cash flow.
They are considered particularly attractive investments when uncertainty over economic growth is high.
Australia's Macquarie bought Thames Water last year for £8bn - a 20% premium to the group's value.
Southern Water is the seventh largest water and sewage company in England and Wales. It provides fresh water to more than two million people in the South East.