Share portfolio - heavy on Utilities. What to do?

John_Smith_2019

NedS wrote: »

National Grid and SSE have moved offshore to protect themselves against Labour plans:

https://www.bbc.co.uk/news/business-50536205

That won't achieve much.
All the company's assets are in the UK.

Eco_Miser

Thrugelmir wrote: »

Where's the £5.8 bn going to come from?

A new issue of gilts, which the shareholders receive in exchange for their shares.

NedS wrote: »

National Grid and SSE have moved offshore to protect themselves against Labour plans:

https://www.bbc.co.uk/news/business-50536205

Labour could decide to expropriate the UK assets without compenstion, leaving the shareholders much worse off.

Apodemus

Interestingly, BBC is reporting this today.

EDIT: sorry already posted by others, not sure why my browser hadn’t refreshed.

hit_and_run

John_Smith_2019 wrote: »

That won't achieve much.
All the company's assets are in the UK.

Indeed.
It also makes SSE and National Grid look like arrogant w*nkers who think the laws shouldn't apply to them, which strengthens the case for nationalisation.

Notepad_Phil

John_Smith_2019 wrote: »

That won't achieve much.
All the company's assets are in the UK.

Eco_Miser wrote: »

A new issue of gilts, which the shareholders receive in exchange for their shares.

Labour could decide to expropriate the UK assets without compenstion, leaving the shareholders much worse off.

These and other companies are setting these up in countries such as Switzerland, Luxembourg and Hong Kong as they have bilateral investment treaties with the UK. These treaties they believe will ensure investors are paid the market rate in the event of any state asset buy-back rather than the cut price valuations that some people in Labour appear to hope they can buy them at.

So yes the companies know they can't stop themselves being nationalised, but they believe that doing this will mean that if they do get nationalised then their shareholders will be appropriately compensated - and no doubt stop any legal action by disgruntled shareholders who would sue them if the company did get nationalised and they hadn't done this.

John_Smith_2019

Notepad_Phil wrote: »

These and other companies are setting these up in countries such as Switzerland, Luxembourg and Hong Kong as they have bilateral investment treaties with the UK. These treaties they believe will ensure investors are paid the market rate in the event of any state asset buy-back rather than the cut price valuations that some people in Labour appear to hope they can buy them at.

So yes the companies know they can't stop themselves being nationalised, but they believe that doing this will mean that if they do get nationalised then their shareholders will be appropriately compensated - and no doubt stop any legal action by disgruntled shareholders who would sue them if the company did get nationalised and they hadn't done this.

Interesting.
So this would present a Labour govt with a choice:
1. Ignore the bilateral agreement.
2. Create more currency to pay the shareholders.

However, the reality here is that the directors of SSE have spent money preparing for a Labour election win that probably won't happen. Not this time anyway.

John_Smith_2019

hit_and_run wrote: »

Indeed.
It also makes SSE and National Grid look like arrogant w*nkers who think the laws shouldn't apply to them, which strengthens the case for nationalisation.

They would argue they are obeying the law, in that they have a legal duty to act in the best interests of their shareholders.
Not their customers.
Not the govt.

NedS

Around 50% of Nation Grid's assets are in the US so how does that work wrt nationalisation? It's not like National Grid is simply a National UK infrastructure / utility company - it's a multinational with significant assets and investments outside of the UK.

John_Smith_2019

NedS wrote: »

Around 50% of Nation Grid's assets are in the US so how does that work wrt nationalisation? It's not like National Grid is simply a National UK infrastructure / utility company - it's a multinational with significant assets and investments outside of the UK.

Presumably the UK govt would just take control and ownership of the UK assets. And the share price would adjust accordingly.

Same as if a mine in Africa belonging to Rio Tinto gets seized. Share price drops. Buyers come in. Some win. Some lose.

Not much different to a govt issuing a large ''fine'' for whatever dubious reason.

hit_and_run

John_Smith_2019 wrote: »

They would argue they are obeying the law, in that they have a legal duty to act in the best interests of their shareholders.
Not their customers.
Not the govt.

They probably would argue that.
But they would be wrong. The legal duties of company directors include considering the interests of other stakeholders as well as shareholders; and there is nothing that says (as is so often assumed) that everybody else's interests should be subordinated to those of shareholders.
They also have a duty to consider the interests of the company as a whole. Which implies they should not blithely trash its reputation for short-term gain.