Listed utilities should explore shifting their businesses offshore to protect investors from the looming threat of nationalisation by Labour, according to analysts at Macquarie.
Labour leader Jeremy Corbyn confirmed Labour’s plan to bring back water and energy network companies into public ownership in a speech a fortnight ago.
According to a note from Macquarie’s equity research team, published in the Financial Times today, an overseas move could give companies lined up for nationalisation better safeguards against future expropriation than if they remained UK registered companies.
“We see UK listed utilities either potentially re-domiciling, or restructuring foreign ownership to enjoy higher investor protection,” says the research note by the Australian investment bank.
According to the FT, the note states that the boards of UK registered utilities have a fiduciary responsibility to explore overseas registration urgently because a switch could “only happen before any potential dispute was reasonably foreseeable”.
And they argue that investors can achieve better protection through the UK’s 1,400 bilateral investment treaties negotiated by the EU, as well 94 by the UK itself, than through UK law and international human rights legislation.
The proposal to offshore UK utilities was attacked by Richard Murphy, a former adviser of Corbyn on economic affairs.
In a blog posted in response to the FT article, he brands offshoring as a “mechanism created by capital to launch an assault on democracy.”
“Macquarie are making it clear that people’s choice to elect a government that might seek to take into public ownership the utilities that serve them should not matter: the ‘fiduciary duties’ of capitalism come first.”