QIC Infrastructure has acquired more than half of New Zealand's second largest electricity and gas distribution business, Powerco, from Babcock & Brown Infrastrcucture (BBI).

The fund manager purchased a 58 per cent equity interest in Powerco for about NZ$423 million ($329 million) cash, subject to certain post-completion adjustments.

Originally, a conditional agreement was entered into on 4 November 2008 for QIC funds to acquire 50 per cent of Powerco from BBI.

"It is pleasing to note that all consents, including regulatory and lender consents, have been received and the acquisition of an interest in Powerco is now complete," QIC head of global infrastructure Ross Israel said. 

Israel said the investment would provide geographic and sector diversification for their clients' portfolios because Powerco was a core regulated utility.

QIC also has plans to expand the company, which provides electricity and gas supplies to more than 400,000 network customers on New Zealand's North Island.

"We now look forward to working with Powerco management and BBI to continue to provide strong service levels for Powerco customers and to further grow the Powerco business," Israel said.

The acquisition excludes Powerco's gas business in Tasmania, which has been transferred out of Powerco.

Established in January 2006, QIC Infrastructure manages a global portfolio of more than $2 billion in unlisted infrastructure assets.