It may be only a matter of time before Severn Trent, like many other water companies, falls into the hands of an overseas owner, with a Canadian-led takeover consortium expected to make an improved offer within the month.
The attempt by a consortium led by a Canadian pension fund highlights an extraordinary mismatch between our own pension funds’ investment strategies and the critical and valuable infrastructure assets of Britain.
Canadian pension funds have been active buyers of UK assets for some time. Anglian Water is already part-owned by one and in 2011 Ontario Teachers’ Pension Plan even bought Britain’s National Lottery operator, Camelot.
The chief executive of one £100billion-plus Canadian pension fund once told me that he foresaw a bonanza of opportunities in Britain for funds such as his and expected to see little or no competition from native funds.
The simple reason was that UK funds lacked scale and expertise. Our funds, particularly in the public sector and former public sector, are fragmented and so each one is quite small.
More... Canadians set to strike again for UK water giant Severn Trent as rising household bills attract foreign predators The bizarre world of petrol pricing: How it's decided what motorists pay at the pumpsBritain’s Universities Superannuation Fund is part of the Canadian-led consortium along with a Kuwaiti investment group. But it is almost inconceivable that a UK pension fund would lead such a deal, let alone carry it out single-handed.
Canada has many funds that each have well over £50billion of investments. In Britain there are only a few on that scale.
And with scale comes expertise. Canadian funds often have their own expert teams to build detailed knowledge and spend time and resources assessing investments.
This must change. Our pension schemes need to be amalgamated to create funds with scale and clout, and to develop the in-house expertise to invest directly in large-scale infrastructure.
That way we might solve some of the misalignment between our long-term pension liabilities and our pension funds – and more of the core infrastructure in this country might remain in British hands.
Probe into oil price-fixing echoes the Libor scandalOnce again light has been shone into a corner of the City, revealing a system without accountability and proper oversight.
The EC’s raids of leading oil companies and the price reporting agency Platts have sparked speculation about how they might have artificially increased the price of petrol.
We do not know what may have gone on and it could take years to find out. But it is apparent that the system for setting these prices has been open to inaccuracy, if not outright manipulation, and is inadequately regulated. It is a clear echo of the Libor scandal.
The Government has said it will bring these key oil reference prices under the same regulatory regime planned for Libor.
Perhaps it is also time for a comprehensive survey of stable doors across the financial markets with a view to shutting a few before any more horses bolt.