Thames Water write-off and Deutsche Glasfaser refinancing push force OMERS to recalibrate its Europe strategy
OMERS has wiped out its entire stake in Thames Water and is pumping fresh capital into a struggling German fibre operator while its European infrastructure leadership turns over.
Ontario Municipal Employees Retirement System, which manages $141bn for 640,000 current and former public‑sector and community workers in Ontario, has lost two senior European infrastructure executives in recent weeks.
The Financial Post reports that long‑time dealmaker Alastair Hall and digital infrastructure lead Chris Hogg have both departed.
Infrastructure Investor reports that Hall, senior managing director and head of Europe at OMERS Infrastructure, joined in 2014 and took charge of European investment activities from London in 2021 after serving as global head of investment strategy and partnerships.
He previously helped allocate capital across European energy, renewables and utilities, including investments in Thames Water, Ellevio, Net4Gas, Associated British Ports, Caruna, High Speed 1, SGN and MapleCo.
Before OMERS, he worked in investment banking at Deutsche Bank and Bank of America Merrill Lynch in London.
According to the Financial Post, OMERS was Thames Water’s largest shareholder and wrote off its entire 31 percent stake in 2024.
Infrastructure Investor reports that OMERS Infrastructure wrote off a 31.7 percent interest valued at £990m in May 2024, shortly before Ofwat placed Thames Water in special measures in July, when the utility’s net debt had risen to £18bn from £11bn at OMERS’ 2017 entry.
In an interview with Infrastructure Investor, Michael Hill, global head of OMERS Infrastructure, said of the Thames Water outcome: “Obviously, we’re very disappointed with the outcome. You don’t go into an investment like this expecting this outcome. We’re very disappointed on behalf of customers in London and all of our stakeholders that we represent.”
He said the team “gave a tireless effort” before deciding, based on its fiduciary obligations, not to keep investing.
The Thames Water situation is now also a political and regulatory flashpoint.
More than 20 opposition and backbench MPs have urged Ofwat and the UK environment secretary to reject a restructuring deal between Thames Water and creditors that hold about £13bn of its roughly £20bn debt, as reported by New Civil Engineer.
The MPs argue the emerging package would short-change customers, weaken environmental protections, and avoid proper accountability.
New Civil Engineer says reported terms include haircuts of up to 30 percent on some Class A debt, higher than the 25 percent floated in October, in exchange for at least 10 percent of equity in a recapitalised company, with more than £13bn of existing value written off.
Polling by Survation for the MPs suggests 54 percent of Thames Water customers want Ofwat to reject the deal and put the company into special administration, and 79 percent view recent bill increases as unreasonable.
OMERS’ other stressed European asset is Deutsche Glasfaser.
The Financial Post reports that OMERS and EQT bought the heavily indebted German broadband provider from KKR in 2020 and now hold a 49 percent stake.
Shareholders have injected £4bn since the acquisition and, according to the same report, cut the rollout target in 2023 from six million homes by 2032 to 3.2 million to contain costs and stabilise the business.
OMERS and EQT proposed a £1.7bn refinancing to Deutsche Glasfaser’s creditors in December.
Under that plan, the owners would provide £1.1bn of “preferred” equity and receive £600m of “super senior” debt, which would rank first in any bankruptcy, ahead of the “preferred” equity and existing equity.
A person familiar with the matter told the Financial Post that Hogg was not the most senior OMERS executive responsible for Glasfaser.
Despite these hits, Infrastructure Investor reports that OMERS’ infrastructure unit produced an annualised 8.8 percent net IRR at the end of 2024, up from 5.5 percent in 2023, though below the 12.7 percent it achieved in 2022, with a 10-year average return of 10.5 percent.
According to the Financial Post, infrastructure accounted for 22 percent of OMERS’ portfolio at the end of June, with 19 percent in private equity and 13 percent in private credit, and European assets representing 18 percent of total holdings.
OMERS is also reshaping its European book.
The fund is exploring the sale of its 33 percent stake in Associated British Ports in a deal it hopes to close in the second half of this year, targeting a valuation of more than £10bn for the UK’s largest ports operator.
The same article notes OMERS sold its stake in London City Airport to Macquarie last year alongside Alberta Investment Management Corp., after Ontario Teachers’ Pension Plan exited to the same buyer in June.
At the same time, a person familiar with OMERS told the Financial Post that these disposals and executive departures do not signal a retreat from European infrastructure.
They pointed to OMERS’ 2024 acquisition of Italian rail station network Grandi Stazioni Retail with DWS.
OMERS also restructured its European private equity team that year and said it would no longer invest directly in private companies in the region.
Infrastructure Investor reports that Hill has said Europe remains an integral part of OMERS’ diversification strategy, even as the fund digests the Thames Water write-off and works through the recapitalisation of Deutsche Glasfaser.
