SYDNEY--Infrastructure investor Infratil said it will buy an additional 4.92% stake in Contact Energy, doubling down on demand for renewable energy as New Zealand transitions away from fossil fuels.

Infratil said it will acquire the shareholding of TECT Holdings in Contact for 437.7 million New Zealand dollars (US$250.7 million), or NZ$8.95 a share.

The deal will be funded using an equal mix of existing debt and the issue of new Infratil shares to TECT.

Infratil first acquired a 9.4% equity holding in Contact Energy when the power company took over smaller rival Manawa Energy in July. Monday's deal with TECT raises Infratil's shareholding in Contact Energy to 14.3%.

Contact Energy's combination with Manawa Energy created New Zealand's second-largest power generator, with a significant pipeline of new projects. Manawa owned and operated 25 hydropower plants across the country, so the deal also increased Contact Energy's exposure to renewable energy.

"We have a deep understanding of the sector through our ownership of Manawa Energy and we're confident in the opportunities created by its merger with Contact," said Jason Boyes, Infratil's chief executive.