Britain up for grabs

The Financial Times has reported that the number of British companies sold to foreign investors continues to rise, with the rate of mergers and acquisitions increasing by nearly 60 per cent over last year.

The value of these deals totalled £240 billion, more than those in Germany and France put together. The FT says that this acceleration in dealmaking is the result of Keir Starmer maintaining a suitable environment for such business.

Selling

All this will no doubt be hailed as a welcome boost for “inward investment” as part of the government’s “pro-business” agenda. In reality this is just selling British industry on the cheap.

The FT quotes Steven Fine, chief executive of stock broker Peel Hunt, who warns that the outlook for publicly listed companies remains bleak, as consistent outflows from UK equities were “draining away support and causing valuations to remain low”.

Exodus

This exodus of British capital from British industry can be no better illustrated than in the collapse of UK pension fund holdings in London-listed companies.

‘This leaves the field clear for predatory asset stripping.’

A report from the Pension Protection Fund shows that these investments are down from 48 per cent in 2008 to 6.6 per cent now, a rate of reduction that is increasing. The consequence is to leave the field clear for predatory asset stripping.

The undervaluing of the London Stock Exchange has for a long time attracted the attention of international financial capital, notably sovereign wealth funds and large investment corporations, all looking for rich pickings.

Target

Public utilities have been a particular target. Thames Water, laden with £15 billion of debt after being taken over by the Australian bank Macquarie, is now again up for grabs.

The Financial Times reports that two of the declared bidders for the company are Brookfield Asset Management, the Canadian investment giant chaired by the former Bank of England governor Mark Carney, and Hong Kong's CKI, which already owns a stake in Northumbrian Water.

The FT also reports that another potential buyer, Covalis, is said to have plans to “sell off billions of pounds of the troubled water company’s assets – including, potentially, entire regions such as the Thames Valley – and then publicly list the remaining rump.”