OMERS ups stake in Thames Water despite nationalisation rhetoric

The increase to a 31.4% ownership is the fourth time in less than a year the Canadian pension fund has boosted its share in the company.

OMERS Infrastructure Management has increased its share in UK utility Thames Water to 31.4 percent.

The Canadian pension fund bought a further 4 percent of the UK water firm, cementing its position as Thames Water’s largest shareholder. UK university pension scheme USS is the second-largest shareholder with 10.9 percent.

The move is the fourth time in the past 11 months that OMERS has invested in Thames Water, beginning with its entry into the company in March last year alongside Kuwait’s Wren House in a transaction believed to be worth about £1.3 billion ($1.8 billion; €1.5 billion). It has since acquired stakes from AMP Capital and Hermes.

OMERS’s investment comes despite increased rhetoric from the UK’s opposition Labour Party, which has promised to nationalise major infrastructure assets, including privately held water companies. Leader Jeremy Corbyn last weekend described water companies as “frightened” and said the regulators were too close to the companies they were meant to be regulating.

“It’s this ridiculous and highly profitable situation that the water companies are so desperate to protect,” he added. “The case for public ownership is so clear and so popular and we’ve demonstrated how it’s an investment with no net cost for the taxpayer.”

Corbyn’s claims were refuted by Water UK, which represents the UK’s major water firms. Michael Roberts, the group’s chief executive, said “the water sector in England was starved of cash and standards were poor” when they were publicly owned.

A recent report by think tank Social Market Foundation said it would cost a UK government about £90 billion to nationalise all UK water companies. However, this was dismissed as “nonsense” by economist Dieter Helm yesterday. Helm, who recently carried out a cost of energy review for the UK government, instead said Labour’s plans to nationalise the companies via a swap of private for public debt is “relatively straightforward”. Helm did not endorse Labour’s plans, rather saying that issues within the industry lay more in regulation and governance than ownership.