English water – profitable “cash cow” for global investors

My last post was about an English water company owned by an overseas bank making millions from British taxpayers. Today comes news of a bid for another English/Welsh water company which, if it goes ahead, looks likely to enrich – or should that be further enrich – its owners and investors.

British water company Severn Trent looks set to become a juicy investment vehicle for Canadian investor Borealis, the infrastructure arm of the Ontario Municipal Employees Retirement System, and the Kuwait Investment Office. The approach is said to be at an early stage, although shares in Severn Trent soared on the news, and shares in Britain’s two remaining listed water companies, Pennon Group and United Utilities, also rose, as their money-making prospects are enhanced by the news, as Securequity sales trader Jawaid Afsar explained to Reuters News:

“United Utilities and Pennon will attract further speculative interest. These are cash cows, generating huge amounts of profits and generating very good dividends, and these make attractive targets for overseas investors.”

The Reuters article continues:

“Yield-hungry investors have been showing strong interest in British water and sewerage firms as they seek stable cash flows and a favourable regulatory structure.”

Stable cash flows – that would be because council tax payers, whether rich or poor, HAVE to pay their water bills  – unless they have their own septic tank.

Let’s hope  Scottish Water stays in public hands.

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