Hermes Investment Management has joined a bid led by the Chinese government for a stake in the National Grid's gas pipe network.
City A.M. understands that people working on the deal have become increasingly wary of government scrutiny.
Theresa May's administration announced recently that it would be making reforms to its approach to "the ownership and control of critical infrastructure to ensure that the full implications of foreign ownership are scrutinised for the purposes of national security."
The deal would involve a consortium buying a controlling share of the National Grid's gas distribution arm – an agreement which could value the business at over £11bn, Sky News reported.
The consortium comprises Hermes, the China Investment Corporation, Germany's Allianz, fund managers Dalmore Capital and Amber Infrastructure, and the Australian bank Macquarie.
It is thought the addition of British blue-chip institution Hermes will help the deal to move ahead. The City asset manager is owned by BT's pension fund.
Hermes and the National Grid have been approached for comment.