REAL ESTATE – A UK parliamentary committee has urged government caution over attempts by foreign investors to acquire British ports.
The recommendation would have blocked Borealis, a subsidiary of Canadian pension fund Ontario Municipal Employees Retirement System (OMERS), which was part of a consortium led by Goldman Sachs that acquired Associated British Ports Holdings (ABP) last year.
There has been no shortage of interest from pension funds in what ABP has called "the ideal infrastructure asset" because of stable returns that are positively correlated with inflation but relatively insensitive to fluctuations in the business cycle, and consistently high barriers to entry.
Ranged against the winning consortium for ABP was a Macquarie-led consortium including Canada Pension Plan (CPP).
"UK ports should be able to compete on an equal footing with their direct rivals on the Continent, who are already differently subsidised and funded," the report said. However, it stopped short of recommending an injection of public cash.
Gwyneth Dunwoody MP, who chairs the House of Commons transport committee, refused to comment on whether she would want to see state subsidies for UK ports – but she denied the report had advocated protectionism.
"We haven’t recommended a block on private capital," she said. "What we’re worried about is where people who buy a port as an investment turn it into apartments."
She was unable to identify a single example, but added: "It’s obvious that’s the way it’s going."
An ABP spokesman pointed out last week that, in contrast to the report’s allegations, the firm had increased capacity at its Southampton port by 85%. "For the company it has been business as usual since the takeover," he said.
Although the committee cited the potential for "industry instability" and underinvestment, it revealed an anti-free market agenda when it wrote: "Our ports are too valuable to be exposed to the unregulated whims of international capital." It urged the government to outline grounds for intervention.
The report concluded: "It is the job of the government to ensure that commercial interests sit within a strategic framework for national development and regional growth…It cannot control the global market but nor can it claim that the market is the only factor which determines where ports develop."
One possibility suggested by the committee is a revamp of planning. The government "can choose to look favourably or not on planning proposals," it said.