Investors

USS wades into Thames Water with 10.9% stake

The pension fund’s deal represents the fourth change of ownership this year for the under-fire utility company.

-

British pension fund Universities Superannuation Scheme has bought a 10.9 percent stake in Thames Water, making it the utility company’s third-largest shareholder.

USS bought the shares from Canada’s Alberta Investment Management (3.3 percent) and OPT rust (4.4 percent), as well as from Australia’s QSuper (3.3 percent). The value of the deal has not been disclosed.

QSuper only bought its stake in April this year and the USS deal is the fourth time ownership of the UK’s largest regulated water company has changed in recent months. Toronto-based Fiera Infrastructure increased its stake from 3 percent to 5 percent in March, paying C$200 million ($148 million; €141 million). While Borealis and Wren House are thought to have spent between £1.3 billion ($1.57 billion, €1.48 billion) and £1.4 billion to purchase a 26.3 percent stake from Macquarie.

The USS acquisition comes six weeks after regulator Ofwat fined Thames Water £8.5 million ¬– its second fine in a matter of months after a judge handed the company a “record-breaking fine for record-breaking offending” to the tune of £20 million, following excessive leakage. Last month’s fine led Ofwat chief executive Jonson Cox to warn the firm it is under “serious scrutiny” and USS has pledged to abide by its obligations as a new shareholder.

“Ofwat has set out clear expectations for the company in terms of both governance arrangements and customer service,” said Gavin Merchant, head of real assets at USS. “We are supportive of the goals of Thames Water’s management team and their objectives to deliver the best possible service to its customers.”

The move for Thames Water is the latest in a string of recent high-profile infrastructure deals by USS – It invested alongside Macquarie in its purchase of the Green Investment Bank in April and bought an additional 18.8 percent stake in Redexis Gas in May.

The pension fund joins the BT Pension Scheme (13 percent), the Abu Dhabi Investment Authority (9.9 percent) and British Columbia Investment Management (8.7 percent) as other high-profile shareholders of Thames Water.