An investment group is expected to announce Monday that it has struck a deal to buy British water utility AWG PLC for about $4.12 billion (2.2 billion pounds), a source familiar with the situation told Reuters on Sunday.

News of the deal was reported earlier on the Wall Street Journal's Web site and the Financial Times' Web site.

The group, which includes British venture-capital firm 3i Group PLC, as well as Australian and Canadian pension funds, has agreed to bid about $29.12 (15.55 pounds, the source said.

AWG in September said it had received a preliminary approach that could lead to an offer for the whole company.

A source told Reuters last month that a consortium comprising 3i, Colonial First Estate of Australia, a fund management arm of Commonwealth Bank of Australia, CPP Investment Board of Canada, and Australian fund manager Industry Funds Management was looking to buy AWG.

Financial investors have been attracted by water companies' stable cash flow.

Shares in AWG, which runs Anglian Water in eastern England, an area with a population of about 5.5 million, closed at 1,551.67 pence on Friday.

AWG declined to comment.