Singapore’s wealth fund snubs regulated UK utilities amid Thames Water crisis

Singapore’s sovereign wealth fund has reportedly told the government that it will not invest in regulated UK water, electricity and gas utilities due to unpredictable rules on infrastructure, in a blow for Labour’s economic strategy.

GIC, the world’s seventh-largest sovereign wealth fund with more than $800bn (£600bn) in assets, declared its stance during a private meeting with environment secretary Steve Reed earlier this month, according to The Sunday Times.

It was said that one person at the meeting, including representatives from the Abu Dhabi Investment Authority and Australian infrastructure giant Macquarie, told Reed that UK utilities were “totally off our radar at the moment” because regulators have become “too unpredictable”.

City A.M. has approached GIC for comment.

The news comes as Thames Water, the UK’s largest water utility, faces the prospect of temporary nationalisation as it struggles under a massive debt pile.

Potential new investors will likely be wary of Thames until regulator Ofwat has published its final determination on how much the firm can charge customers over the next five years, which will be published in December.

Reed was reportedly told at the meeting that Ofwat’s price caps, rather than allowing water firms to hike bills as much as they want, would impact wider investment in the sector.

Reed claimed just this month that beefing up water regulation would “attract global investment” to rebuild the UK’s sewage and pipeline infrastructure.

His comments came shortly after unveiling the Water (Special Measures) Bill in Parliament, which ramps up watchdogs’ powers to issue fines, conduct oversight and recoup the costs of investigations.

The comments come at a difficult time for the prime minister, Keir Starmer, and his chancellor, Rachel Reeves.

The new Labour government has placed a lot of hope in attracting billions of pounds of foreign investment into the UK to turbocharge growth.

However, the government’s growth plans have gotten off to a shakey start.

Sky News reported that fewer than 150 of the 300 companies ministers have pledged to attract to its flagship investment summit next month had confirmed their attendance.

GIC is understood to remain bullish on other UK investment opportunities. Around five per cent of the fund’s investments are in the UK.

A GIC spokesperson told The Sunday Times: “GIC established its European headquarters in the UK in 1990. For more than three decades, GIC has been investing in the UK across public and private markets.

“We remain committed to the UK market and will continue to look for investment opportunities that will be good additions to the total global portfolio.”

A spokesperson for the Department for Environment Food and Rural Affairs commented: “These were constructive talks about how there are significant investment opportunities in a reformed water sector where our creaking water infrastructure is upgraded and we clean up our rivers, lakes and seas.”