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J.P. Morgan to take 29.9% of pension-backed listed water fund

West Midlands pension fund says it will keep its stake

Two private equity funds from US investment banking giant J.P.Morgan have offered to buy 10.3m shares in the UK pension fund-backed water fund Aqua Resources, a move that would lift their stake in it to 29.9%.

In a statement, Aqua said the funds had offered €0.35 per share – a premium of 20% over the closing price on August 13. By capping their stake at just under 30%, the J.P.Morgan funds are not obliged to make an offer for the rest of Aqua’s shares as required by UK takeover laws.

Aqua is run by Cayman-registered Four Winds Capital Management, which manages its €69m in assets. After listing on the London Stock Exchange in July 2008, Aqua’s shares traded above €1 for a brief period.

Since then the shares have fallen; currently at €0.32, they are trading at a significant discount to the fund’s net asset value (NAV) of €0.95.Aqua’s other major shareholders are the £8.6bn (€10.9bn) West Midlands pensions fund and the £5bn Merseyside Pension Fund. West Midlands told Responsible Investor that it would maintain its stake of near 30%.

Merseyside and Four Winds CEO Kimberly Tara, who own around 9% and 5% respectively, were not available for comment.

In the statement, Aqua also said that its extraordinary shareholder meeting has been put back to September. The main purpose of the meeting is for shareholders to vote on the fund’s de-listing from the London exchange. Aqua has been in breach of listing rules since April.

Aqua’s board also wants shareholders to approve an amendment to the fund’s investment policy that would ban new investments. Aqua statement