Big Profits in Britain After Water Utility Privatization

Britain’s water companies made a big splash on London’s stock market Tuesday as some of the 2.7 million investors who bought stock in 10 companies in England and Wales reaped instant profits when the shares began trading.

The controversial selloff of the companies was the latest in Prime Minister Margaret Thatcher’s sweeping privatization program and the third biggest after British Petroleum and British Gas. Water utilities in Northern Ireland and Scotland were not included in the offer.

The $8.4-billion (5.25 billion pounds) flotation had 5.7 orders for each share offered. Delighted government officials hailed the demand for the stocks as a reaffirmation of popular capitalism.

It was at one time the most unpopular of Thatcher’s privatizations because feelings ran high about putting the water authorities in private hands.

But an attractive offer price, a promise of lucrative dividends and generous incentives, coupled with easy payment, turned what some analysts had predicted would be a potential flop into a roaring success.

Northumbrian Water Group was the star performer, surging to $2.72 (1.70 pounds), compared to the $1.60 (1 pound) price at which the government sold each share.

Other water companies made 64 cents (40 pence) or so on paper for their new owners, but many investors could not take profits immediately because share certificates will only be sent out Dec. 20.

Any purchaser of the new shares can trade them before he or she receives the certificate.