Vultures who left Thames Water with £10bn of debt
CONTROVERSIAL investment bank Macquarie has sold Thames Water after a decade in which it piled on debt, sucked out profits and paid virtually no tax.
The lender is thought to have raised around £1.3bn from the sale of its final 26pc stake to the Canadian pension fund OMERS and the Kuwait Investment Authority.
It follows years of criticism for the Australian business, which was dubbed the vampire kangaroo for its assetstripping ways.
Macquarie bought Thames from RWE in December 2006 but has since sold most of its stake to other investors.
Around £1.2bn has been withdrawn in dividends during that time, and Macquarie has driven up Thames’s debt from £1.6bn to £10bn. This cash has been used to fund a £1bn-a-year spending spree on treatment plants and tunnels, as well as a drive to reduce leakage.
It has also allowed Thames to pay just £100,000 in corporation tax since 2006. At the same time, the pension deficit has ballooned to £260m, though the water company has pledged to plug this black hole by 2025.
Martin Blaiklock, a former utilities director at the European Bank for Reconstruction and Development and a persistent critic of Macquarie, said: ‘I think customers have been stuffed. They’ve ripped customers off and they’ve got away with it. It’s a shocker.’
Thames has a chequered history on customer service and was fined twice in the year to the end of March 2016. It was also fined £1m in January for repeated sewage pollution in the Grand Union Canal in Hertfordshire.
Labour MP Frank Field, who chairs the Work and Pensions Select Committee, urged the Prime Minister ‘to teach these rip-off companies that they’re not running one-armed bandits where they always win’, adding: ‘They have huge responsibilities to their pension funds, their employees and their shareholders.’
The GMB union’s Stuart Fegan said: ‘This deal doesn’t tackle the complex web of companies with a grip over our water industry or the ever-increasing levels of debt repayments shelled out to foreign based investors – this deal is more a case of “pass the parcel”.
‘If this Government is serious about tackling offshore investments and structures potentially designed to minimise their tax responsibilities in the UK, then it could start by ensuring long-term decisions about our water supply are taken in the best interests of customers and the workforce.’
Despite its record, Macquarie’s infrastructure head Martin Stanley said his company had been a responsible owner.
‘We feel privileged to have been associated with Thames Water and are pleased to have significantly increased investment levels and improved operational performance,’ he said. ‘Today, Thames Water is undoubtedly a better, stronger and more customerfocused business than that which we invested in back in 2006.’
Macquarie owns a string of infrastructure assets across the world and is leading a consortium which is the preferred bidder for National Grid’s gas division.
It also wants to buy the Government-owned Green Investment Bank. Both deals have been heavily criticised by campaigners who fear the Australian lender will suck out profits rather than acting in customers’ best interests.