Thames Water’s second largest shareholder, Universities Superannuation Scheme (USS), has reaffirmed its support of the water company and its turnaround plan.
USS, which holds a 20% stake in Thames, said it still sees the utility as a long-term investment opportunity, and itself as a “patient” investor.
That is despite slashing £600 million off of the valuation of its stake.
“As a long-term investor, we can provide patient capital and be an active, responsible steward of the company,” USS said.
“While the value we place on our Thames investment may go up or down as part of our regular revaluations, we continue to view this as a long-term investment, in line with the long-term needs of the scheme.”
The pension fund gave its backing to Thames’ business plans and said it would be willing to commit additional funds in the future.
It said the long-term objective of repairing major infrastructure was in strong alignment with its commitment to paying its members’ pensions. This however had the caveat of there being “an appropriate regulatory environment”.
The change in valuation was attributed to soaring energy prices, however USS added it was not unusual for an investment value to fall and rise.
USS became a shareholder in 2017 and has not received a dividend since then, instead reinvesting capital back into Thames to boost performance.
The reassurance comes after USS and majority shareholder the Ontario Municipal Employees Retirement System (Omers) both devalued their holding in Thames’ parent company Kemble Water.
Last June, Omers was understood to be reluctant to continue to pump equity into the water company, while USS – the largest British shareholder – was understood to remain supportive.
Thames Water’s senior team said in December that the business had insufficient funds to pay £1.35 billion of debts due to mature between this year and 2028.
Chief financial officer Alastair Cochran said a supportive determination for Thames’ PR24 business plan was crucial to securing more finance from existing or new investors.
Omers holds a 31% stake in Thames. Other shareholders include sovereign wealth fund China Investment Corporation and Infinity Investments, a subsidiary of the Abu Dhabi Investment Authority.