BT buys utility stake to manage inflation risk

14.10_HandshakeThe BT Pension Scheme (BTPS), the UK’s biggest corporate retirement fund, has acquired a minority stake in Thames Water, the largest waste and water company in Britain.

BTPS says it is seeking greater exposure to domestic infrastructure investments that have a natural linkage to UK inflation because its own liabilities are linked to inflation.

Frank Naylor, head of strategy for BTPS Management, the executive arm of BTPS, said the investment demonstrated BTPS’s ongoing commitment to investing in domestic infrastructure.

“Thames Water is a well established business governed by a mature, transparent regulatory regime that should provide predictable inflation-linked cash flows over the long term.”

BTPS is the largest UK corporate pension fund with around £38 billion (€47.5 billion) of assets and significant inflation-linked liabilities.

The stake was made through a shareholding in Kemble Water Holdings Limited and the acquisition was arranged by Hermes GPE, the pension fund’s infrastructure adviser, which will also manage the interest.

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