The BT Pension Scheme has agreed to acquire a 13% stake in Thames Water through a shareholding in Kemble Water Holdings Limited in order to increase its exposure to domestic infrastructure investments that have a natural linkage to UK inflation.

The acquisition was arranged by Hermes GPE, the scheme's infrastructure adviser, who will manage the interest on the fund's behalf.

As the UK's largest corporate pension scheme, BT's long-term liabilities to its pensioners are linked to UK inflation and the scheme says it is therefore seeking to increase its exposure to domestic infrastructure investments which are linked to inflation.

Frank Naylor, head of strategy for the executive arm of the BT pension scheme said: "The investment in Thames Water clearly demonstrates the scheme'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."

According to data held by Pension Funds Online, the BT pension scheme is the largest corporate pension fund in the UK with assets worth £38bn. The scheme has 325,000 members and makes annual pension payments of £2bn.

First published 31.05.2012

azeevalkink@wilmington.co.uk