Canadian pension giant short sells English water stocks

Investors react as UK water industry continues to face scrutiny with debt pile

Canadian pension giant short sells English water stocks

The Financial Conduct Authority (FCA) has revealed the Canada Pension Plan Investment Board (CPPIB), which manages over C$570 billion in assets for the Canada Pension Plan, is short selling stocks, with new data showing the pension fund accruing hefty bets against Severn Trent and United Utilities.

The financial watchdog requires investors to disclose publicly short bets if they reach 0.5% of a company’s issued share capital. The recent data has made CPPIB currently the only investor with an outstanding short against United Utilities that has been disclosed publicly and one of the two funds that have bets against Severn Trent disclosed publicly.

This follows the severe scrutiny water companies are facing after Thames Water reported financial troubles, revealing a debt reaching as much as £14 billion. In June, Thames Water chief executive Sarah Bentley stepped down from her position, giving up her bonus.

Severn Trent’s shares have fallen 15% since May, while United Utilities’ shares decreased by 10%. The UK government has drawn up contingency plans for the future of Thames Water, discussing whether re-nationalisation would be necessary.

Water companies were privatized in 1989 under Margaret Thatcher’s Conservative government with an aim to upgrade Britain’s sewage network. Thirty years after the privatisation, there have been little developments materialized, and the industry has accumulated debts reaching up to £65 billion.