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HomeBusinessIs a U.K. utility, part-owned by Canadians, at risk of failure? 

Is a U.K. utility, part-owned by Canadians, at risk of failure? 

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Bob Mackin

Two Canadian pension funds — one of which is Victoria-based — are shareholders in London’s troubled water and sewage utility company.

The Financial Times reported June 28 that Thames Water is in talks with the U.K. government about potentially nationalizing the company, which is facing a crisis over its GBP 14 billion debt, worth $23.4 billion in Canadian funds. CEO Sarah Bentley suddenly quit June 27 and a new chair, Adrian Montague, was officially announced June 30.

(Thames Water)

Ontario Municipal Employees Retirement System (OMERS) is the biggest external shareholder with a 31.777% stake. B.C. Investment Management Corporation (BCIMC) holds 8.706%. Other investors include sovereign wealth funds in Abu Dhabi and China.

In 2006, the BCIMC Crown corporation was part of the Kemble Water Ltd. consortium, led by Australian investment bank Macquarie, that acquired Thames Water from Germany’s RWE AG for GBP 8 billion. 

Thames Water issued a statement to the London Stock Exchange (LSE) on Wednesday, downplaying what it called “press speculation.”

OMERS has not replied. BCIMC refused comment, instead referring a reporter to the LSE statement, which said the company had the equivalent of $7.4 billion in cash, received $841 million of new funding from shareholders in March “and is continuing to work constructively with its shareholders.” 

Financial Times reported that shareholders pledged more than $2.5 billion a year ago.

BCIMC’s most-recently released investment inventory, dated March 31, 2022, showed Thames Water among 27 companies under its infrastructure and renewable resources portfolio, which represents 9.5% of BCIMC assets under management. The portfolio represents 9.5% of BCIMC’s $233 billion assets under management. 

The regulator, Water Services Regulation Authority, which goes by the brand name Ofwat, was “deeply concerned” about Thames Water and four other regional monopolies, which it deemed “the worst performing companies operationally.”

In November, Ofwat ordered Thames Water to return more than $84 million and Southern Water $50.5 million to customers after missing performance targets. 

“The poorest performers, Thames Water and Southern Water, are consistently falling beneath our expectations and those of their customers,” Ofwat said. “They need to take immediate action to improve their performance and rebuild trust with the people they serve. We will continue to hold companies to account for their performance and we will make sure that they raise their game.”

One of the biggest voices urging action to reform Thames Water is fly-fishing enthusiast and environmental campaigner Feargal Sharkey, who gained fame as the lead singer of Northern Ireland punk band the Undertones in the late 70s and early 80s. 

“We, the customers, have for 30 years already provided all of the funding necessary for water companies to comply with the law, something water companies confirm to Ofwat each and every year,” Sharkey Tweeted. “Where’s our money gone? What has happened to it? When can we the customer have a refund?”

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