Plans for a £4.2billion super sewer are a step closer to fruition after a consortium including German finance group Allianz was picked as the preferred investor for the project.

The contract to deliver the Thames Tideway Tunnel, which has been designed to alleviate pressure on the capital’s sewer system during heavy rainfall, had been keenly contested with 12 companies bidding for the deal.

And newly-created company Bazalgette Tunnel Limited is in line to own, finance and build the 15-mile tunnel, which would run under the River Thames.

Bazalgette’s shareholders are a consortium of investors including funds managed by Allianz, Amber Infrastructure Group, Dalmore Capital Limited and DIF.

The tunnel would provide storage and conveyance of combined raw sewage and rainwater discharges that currently overflow into the river.

Blueprints for the project were developed by Thames Water, the UK Government and Ofwat in an attempt to stem the 39million tonnes of untreated sewage that flows into the tidal river each year from the capital’s network of Victorian sewers.

Former communities secretary Eric Pickles gave the go-ahead for the scheme in September 2014, but was met with fierce opposition, with Southwark Council attempting to launch a judicial review into the scheme.

The authority claimed construction around the Chambers Wharf area of Bermondsey would have a devastating impact on the area, but the review was scrapped after Southwark failed to submit court papers in time.

Allianz chief investment officer Christian Fingerle said: “We are convinced this project will modernize a pivotal aspect of London’s essential infrastructure and are delighted that Allianz can help to upgrade London’s sewage system for 22nd century London.

“This investment will be a very important partnership between Allianz, our consortium partners, our contractors and Thames Water, working closely with the UK water regulator Ofwat and the Environment Agency to achieve a major improvement to London’s iconic river.”

The new infrastructure provider for the Thames Tideway Tunnel will be chaired by Sir Neville Simms, with former Crossrail programme director Andy Mitchell as CEO.