Qatar’s sovereign wealth fund has continued penetrating the United Kingdom, by taking a £200m stake in Severn Trent, one of the UK’s biggest water companies, reported the Financial Times.
Severn Trent is among the largest of the UK’s 10 regional water supply and sewerage monopolies, serving about 8m people in Birmingham, Gloucester and the Bristol Channel area. It is one of three water companies listed on the London Stock Exchange, while the others are owned mostly by overseas investors, including sovereign wealth and private equity funds.
The opposition Labour party has set out plans to renationalise UK water companies should it win a general election. Shadow chancellor John McDonnell has said a Labour government would pay less than £15bn to investors when it renationalises the industry, compared with an estimated £44bn market value of their investments.
The Qatar Investment Authority has nevertheless pumped billions of pounds into UK real estate and infrastructure in recent years. Its decision to invest in Severn Trent follows its purchase of a 3.3 per cent stake in Sirius Minerals, the London-listed company building a giant fertiliser mine under a national park in North Yorkshire.
In 2006, the QIA failed in a £7bn takeover bid for Thames Water after being outbid by Macquarie, which exited the UK’s largest water company in 2017. Macquarie sold its stake for an estimated £1.35bn to Omers, the Canadian pension fund, and the Kuwait Investment Authority.
The UK water industry is under pressure from across the political spectrum for excessive payouts to shareholders and executives. On Friday, Thames Water’s chief executive, Steve Robertson, was fired with immediate effect for poor performance ahead of a report by the regulator due in July.
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