UK pensions buys 13% of Thames Water

The BT Pension Scheme, the UK’s largest pension fund, has become the utility's second-largest shareholder after picking up the stake from two Macquarie funds in a deal arranged by Hermes GPE. Macquarie is still Thames Water’s largest stakeholder with 26% of the utility.

Two Macquarie funds have sold a combined 13 percent in UK utility Thames Water to the BT Pension Scheme, the UK’s largest pension with some £38 billion (€47 billion; $59 billion) of assets, for an undisclosed amount, both parties announced in statements.

The sellers were the Macquarie European Infrastructure Fund and the Macquarie Diversified Infrastructure Fund. The deal, arranged by Hermes GPE – the UK pension’s infrastructure adviser, which will also manage the stake – will see the BT Pension Scheme become Thames Water’s second-largest shareholder. Macquarie, through various funds, will still be Thames Water’s largest shareholder with 26 percent of the utility.

Shares in Thames Water, the UK’s biggest water and waste company, are popular commodities and have been swapping hands in recent months.

At the beginning of the year, Santander Private Equity, part of Spanish bank Santander, and Portuguese investment fund Finpro were the main sellers of an 8.68 percent stake in the water firm to the China Investment Corporation. Analysts estimated the 8.68 percent stake might have swapped hands for between £500 million and £700 million.

Last December, the Abu Dhabi Investment Authority, a Middle East sovereign wealth fund, purchased 9.9 percent of Thames Water from Macquarie for an undisclosed amount.

Macquarie led the Kemble Water Holdings consortium that acquired Thames Water in December 2006 for £8 billion from German utility RWE. At the time of acquisition, Kemble Water included the likes of AMP Capital, Santander Private Equity, Dutch pension ABP, Alberta Investment Management and Queensland Investment Corporation, to name just a few of the consortium's members.  

UK water utilities have proven popular with foreign investors.

Last August, Hong Kong’s Cheung Kong Infrastructure spent £2.4 billion buying Northumbrian Water. The infrastructure arm of business tycoon Li Ka-shing also owns 4.75 percent of Southern Water and used to own 100 percent of Cambridge Water, which it was forced to sell after it acquired Northumbrian Water to avoid breaching UK competition law.