OMERS Infrastructure ups stake in Thames Water: Reuters

Canadian pension fund OMERS said on Thursday it had raised its stake in Thames Water, Britain’s largest water company, to around 32 percent, shrugging off worries about renationalisation.

The infrastructure investment manager of OMERS (Ontario Municipal Employees Retirement System), said it had bought another four percent of Kemble Water Holdings Ltd, the ultimate holding company of Thames Water.

Investors value British utilities for their steady returns and OMERS started accumulating a stake in Thames Water last year, despite Britain’s opposition Labour Party saying it would nationalise industries such as rail and water if elected.

The financial details of the deal, which is expected to close later this year, were not disclosed.

Thames Water referred questions to OMERS, which was not immediately available for comment.

But one source close to the situation said new investors were very confident about the regulatory framework, predictability and the dialogue with the authorities. The source pointed to Thames Water’s increased capital spending program, new management team and improved communication.

“They (investors) are long term believers in the sector and are committed to increasing the capital spend on improving the operational performance, quality and resilience of the framework,” the source said.

A source at another infrastructure fund said investors were not taking Labour Party proposals seriously at the moment. “As it stands, investors dismiss it as unaffordable rhetoric,” the source said.

Update: OMERS initially agreed to invest in Thames Water in March 2017, partnering with the infrastructure investing arm of Kuwait Investment Authority. The minority stake was bought from Macquarie.

(Reporting by Kirstin Ridley and Dasha Afanasieva; Editing by Adrian Croft and Kirsten Donovan)

(This story has been edited by Kirk Falconer, editor of PE Hub Canada)

Photo courtesy of Thames Water Utilities Ltd