Citigroup is providing about £100m (€148m) of equity in addition to debt finance and mergers and acquisitions advice as part of Guy Hands' £7bn bid for Thames Water, the UK business of German utility RWE.

Hands' private equity firm Terra Firma has lined up a £5bn debt package, financed by Citigroup, Lehman Brothers and Merrill Lynch, which are co-advisers with Morgan Stanley. A banker said: "Citigroup got in early and good luck to it. There is no shortage of equity available on this deal, so the rest of the banks have probably missed the boat." GIC, the investment arm of the Singaporean government, which backed Spanish construction company Ferrovial's successful bid for UK airports operator BAA, is providing the biggest part of the equity with Terra Firma. Citigroup, Lehman Brothers and Merrill Lynch are thought to be each lending £1bn of debt. The investment marks the second time Citigroup Alternative Investments, the private equity arm of the bank that sits within its wealth management division, has backed a bid by Terra Firma. Last year, Citigroup provided equity to Terra Firma for its acquisition of Viterra, the real estate arm of German utility E.On. A rival consortium led by the Qatar Investment Office, thought to include UBS Investment Bank, is also rumoured to be bidding for Thames, while Australian bank Macquarie is believed to be lining up an offer. The banker said: "The other consortiums are on the lookout for equity partners, so other banks may emerge in this role." The decision by CAI to invest is part of a trend among investment banks that are raising funds dedicated to infrastructure investments. CAI declined to comment.