OMERS could lose its investment as the UK government considers taking Thames Water back into public ownership
The Ontario Municipal Employees Retirement System (OMERS), which manages infrastructure investments, faces potential risk due to the UK government's ongoing considerations to address the financial instability at Thames Water.
The utility, the largest water provider in the UK, is grappling with significant financial challenges after its parent company, Kemble Water Holdings Ltd., halted further investments citing regulatory limitations. This led to Kemble defaulting on a debt interest payment.
Thames Water is deemed too critical to fail as it supplies water to one quarter of the UK population, including London. According to The Guardian, the government may consider renationalizing the company, a move that would likely impact its lenders and shareholders.
As Thames Water's largest investor, OMERS Infrastructure Management Inc., holding a 31% stake, is particularly exposed.
Financial implications for OMERS were evident last year when Omers Farmoor Singapore PTE reported a near 30 percent write-down on its investment, as detailed by the Financial Times.
Further distressing news from The Guardian suggests that, under government renationalization plans, shareholders including OMERS could potentially see their investment completely eradicated.
Wealth Professional has reached out to OMERS for commentary on this developing situation.
Meanwhile, analysts from RBC Capital Markets LLC have stressed to Bloomberg the urgency of clarifying Thames Water's status so that the industry can concentrate on resolving network issues and meeting regulatory demands.
Originally scheduled to release a business plan update this Friday, Thames Water has postponed the announcement to next week. This delay adds another layer of uncertainty for stakeholders, including the pension and benefits community closely monitoring OMERS' involvement.
