If Thames Water fails, the University pension scheme will lose its largest investment.

The second biggest investor in Britain’s water company is Britain’s largest pension fund

If Thames Water collapses, Britain’s largest pension fund could lose its single biggest investment.

Universities Superannuation Scheme, which has 500,000 members, and invests £82bn, increased its stakes in Thames Water only 18 months ago. It praised the performance of the company under Sarah Bentley, who was then CEO.

USS purchased an additional 8,77% of Thames Water in December 2021 from Wren House. This infrastructure investment arm is part of Kuwait Investment Authority.

Wren House was sold after only four and half years. Infrastructure funds usually hold their investments for a long time.

USS is the only UK investor among Thames Water’s nine shareholders. USS is Thames Water’s only UK shareholder.

USS has not disclosed the value of its share in Thames Water , but it is expected that a substantial write-off will be made.

In 2017, the Ontario Municipal Employees Retirement System and Wren House purchased a 26pc share from Australian bank Macquarie for £1.35bn, valuing it at £5.2bn.

If the business valuation today is the same, USS could be forced to write down more than £1bn in order to save Thames Water.

Thames Water has begun talks with the owners of its company to inject £1bn in new capital. The shareholders have not yet agreed to the capital injection, despite months’ worth of discussions.

Ms Bentley’s shock resignation as chief executive shed light on Thames Water’s finances. The Government then revealed that it was preparing contingency plans in case the company collapsed.

USS has not yet formally agreed to this move, but is widely supportive. OMERS is not yet convinced. USS and Omers declined comment. USS, the pension fund outsourcing company Capita was the victim of a high-profile cyberattack. Pension fund managers warned in May they couldn’t “confirm” if some of USS 470,000 members’ personal data had been accessed.

USS was criticized by staff from London Universities earlier this month for not doing enough to safeguard the environment. Professors have sued directors and trustees who failed to divest from fossil fuels. They claim that this will lead to a decrease in returns.

University staff began industrial action in early 2014 after the University and College Union claimed that USS reduced retirement benefits.

Recent scheme valuations suggest that the USS has better capitalisation than previous years. In May, bosses said that the funding situation looks “very promising” and revealed an £7.6bn excess.

Bill Galvin, the USS Group chief executive who will be replaced later this year by NatWest Employment Director Carol Young, announced the surplus to calm fears over the Capita Data Breach.

Mr Galvin stated: “I would like to assure you that the privacy and security of your data is our top priority. We are confident that the pensions of our members will remain safe after we have reviewed and strengthened our systems.

We know that our members are concerned about the privacy of their data. “We are deeply sorry that this happened and we will support them in this issue.”

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