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The Asset Manager Society

On who owns our fundamental infrastructure.
Mathew Lawrence

The Asset Manager Society

With profitable companies pouring raw sewage into the rivers of England and Wales, unsurprisingly the water industry has emerged as a major political issue. What is more unexpected is the lack of ambition mustered in response to public outrage. Both the UK government’s “plan for water” and opposition promises to impose retrospective fines fail to contend with the fundamental issue: the sector’s outcomes are entwined with the rise of the asset manager society, an ongoing phenomenon in which the fundamental infrastructures we all rely on have been actively transferred into the ownership and control of a network of international asset managers, transforming public assets into sites for the extraction and upward redistribution of income from ordinary households to wealthy investors. Unless we contend with this, with the fact that from water to energy, from housing to telecoms, our essential utilities and infrastructures are not organised for the public good but private profit, we can never fully address the systemic root of our overlapping crises.

The asset manager society, as defined by the geographer Brett Christophers in his new book Our Lives in Their Portfolios, is “a society in which asset managers increasingly own and control our most essential physical systems and frameworks, providing the most basic means of social functioning and reproduction.” Unlike the rise of so-called “asset manager capitalism”, which denotes the growing concentration of corporate share ownership by a small knot of vast asset managers like BlackRock and Vanguard, the asset manager society is about the direct investment in and active ownership of “real” assets like housing and water infrastructure that define the terrain of social life itself. The goal of these companies: to command this infrastructure to generate income through reliable, predictable payment streams and capital gains. How these owners commercialise their assets — the terms we can access them on, how they invest to sustain and grow these infrastructures — consequently intimately patterns our lives.


The water industry exemplifies the set of income streams, extractive relationships, and forms that the asset manager society takes — and the inequalities and inefficiencies it systematically generates. Through ownership and control of water infrastructure and companies, a network of powerful firms is able to take a significant cut from the public for the meeting of the most essential of needs, needs met under monopoly conditions. Since privatisation of English and Welsh water and sanitation services in 1989, £72 billion has gone to shareholders — around £2 billion a year on average. Meanwhile, demonstrating the use of leverage as a strategy for financialised value extraction, the water companies have built up a debt mountain of £53 billion, much of it going to finance dividends for shareholders. As a result, while our bills have gone up by 40% in real terms since privatisation, since the 1990s investment from the privatised English water companies has gone down 15%. By contrast, publicly owned Scottish Water has spent £72 more per household per year (35% more) than the English water companies, resulting in better outcomes for users and the environment.

Asset manager firms were key beneficiaries of these interlocking processes. A landmark moment came in 2006 with the acquisition of Thames Water, the country’s largest water company, by a Macquarie-led investment consortium. While ownership of Thames Water has subsequently changed hands, asset managers have become increasingly central in the sector: three water companies are majority owned by asset-management firms, and at least two others are owned by investment consortia themselves controlled by asset managers. Tellingly, the UK — as so often when it comes to ownership of fundamental infrastructures — is an outlier in the extent and duration to which asset manager firms own and control the water industry. There is a simple reason for this. Internationally, the water industry is typically seen as less attractive for private investors relative to other infrastructure sectors, not least because the essential nature of the service means that operators cannot cut off provision in the event of non-payment. Yet UK government policy has actively made the sector a more attractive investment proposition, not only by privatising the industry in the first place, but through an accommodating regulatory regime and by, for example, making it relatively easier to increase tariffs in England and Wales. The outlier status of water industry ownership in this country therefore underscores how the rise of asset manager society did not just happen, it was and is an active political project to transform public wealth into private riches.

The issue, though, is not just the divergence of income away from publicly owned assets and companies toward private asset managers and their investors. It is also that new debt-driven financial techniques are inserted into the development of critical infrastructure, not to fund productive activity, but to increase investor returns. Consider the Thames Tideway Tunnel, key infrastructure to ensure London’s future water safety. As Christophers explores, this is owned by a consortium of four major asset managers. In 2015, they invested a collective sum of £1.3 billion, but only £510 million was equity; shareholder loans amounted to £765 million. A shareholder loan is where some or all of the debt used to finance an investment is provided by the same institution or institutions that are investing equity; these loans in term generate interest payments over the life cycle of the investment which are equivalent to dividend payments. In the case of the Tideway Tunnel, the four asset managers that own the project have already been receiving interest payments on their loans despite the project not coming live until 2025. Shareholder loans create a significant new mechanism for generating returns. In 2017-18, for example, this amounted to £51.6 million, money that comes from an increase in household water bills, not to finance investment but to fund shareholder rewards. This is neither a rational nor fair model for how to finance and maintain the things we all rely upon, yet it is ubiquitous.

Rentier Island

These financial techniques and the ownership models they are linked to are not confined to the water industry. As Christophers meticulously documents, major asset managers now dominate much of the infrastructure of the UK. The giant Australian firm Macquarie, for example, led a consortium in 2022 to acquire a majority stake in National Grid’s gas transmission, the network that is fundamental to our heating and energy system, while investment from the firm has supported 50% of the offshore wind farms in operation in the UK. Two of the UK’s three leading rolling-stock companies are owned by investment consortia controlled by asset managers. Asset managers control almost 15% of the care home sector. Or consider the entry of asset managers into the residential landlord market, with Blackstone’s 2020 acquisition of iQ Student Accommodation. At a cost of £4.7 billion this was the largest-ever private property deal — an indication of the rapid growth and scale of the asset manager society. The entry into housing has, of course, been hugely profitable. Blackstone Real Estate — which specialises in “real” asset ownership, with the UK a significant market — was fifteen times more profitable than BlackRock over the period 2018-20, despite having significantly fewer assets under management. In other words, the asset manager society as an arrangement for organising access to fundamental infrastructure is pervasive and at the heart of our model of rentier capitalism.

We are fast approaching a critical juncture. From green energy generation to a renewable-ready grid, from social care to affordable housing, meeting the challenges confronting the country will require transforming our physical and social infrastructure. The questions then become how should we finance this capital-intensive process and who will own and operate the infrastructure? The answer from the major political parties is clear: the asset-management industry. For example, the Treasury is seeking to mobilise £100 billion over the next ten years from insurers through its Solvency II reforms to invest in UK infrastructure, investment that will be channelled through the dominant asset managers. Meanwhile, the Labour Party has declared it would mobilise private pension funds — and therefore, the asset managers which they allocate their funds to — to finance the build out of the key infrastructures of the 21st century.

This approach would be a fundamental mistake. It would lock-in and expand the asset-manager society, our fundamental infrastructures owned and controlled by financial investment firms. The siphoning of money from the many to the few would ratchet upwards. In doing so, it would result in higher bills for ordinary households. This is because, when it comes to funding vital infrastructure, private financing is significantly more costly than state funding for three reasons. First, private finance only invests because it expects a return in the form of a rich stream of income it can convert into profit; eliminating dividend payments made to shareholders would save money for ordinary billpayers. Second, the cost of borrowing for asset manager firms or other private sector entities is habitually higher than public sector borrowing to invest in developing and maintaining infrastructure. The difference in borrowing costs is reflected in higher bills. Finally, as the political economist Daniela Gabor has explored at length, asset managers and other investors increasingly demand the de-risking of their investment, with the resources of the state mobilised to guarantee private sector returns, privatising the rewards but socialising the risks. Whether through rising bills or higher taxes, the public pays.

Escape from Rentier Island

What, then, is the alternative? The only durable response is to take aim at the underlying problem: the extractive dynamics of the asset-manager society. So long as the infrastructures we all rely on are organised as sites of value extraction instead of relationships of shared commitment to the meeting of collective needs we will remain trapped on rentier island, subject to the relentless upward redistribution of income from ordinary households and businesses to the asset owning giants. Breaking from this impasse necessarily means thinking about transforming ownership and control of these infrastructures and assets, both existing and those still to be built, which in turn requires reshaping the direction and nature of investment. Currently the ownership structure of key infrastructures turns them into vehicles for our collective dispossession but through public investment in publicly owned infrastructures we can refashion them as infrastructures for the development of our common wealth.

The specifics of such an approach require further development and must be attuned to the specifics of sector and place. But the contours are clear. Unlike the present, in which private financing, profit-maximising goals and market-based provision guide the development of and access to fundamental infrastructures, we should organise our infrastructural future based on the public financing of investment, social provision and democratic planning to meet urgent shared needs. This approach is cheaper, more democratic, and expands public wealth instead of creating new sites for value extraction and financial engineering.

A new nexus of public and democratic ownership and control of foundational infrastructure is how we best move toward the three touchstones of the progressive agenda our age of overlapping emergency demands: democratisation of economic life, decommodification of provision, and decarbonisation of activity. By rolling back the asset manager society we can build a political project that takes aim at the economic forces underpinning the inequality and stagnation that are the hallmarks of contemporary Britain: unaccountable concentrations of power, rent-seeking run amok, broken markets and unearned wealth that compounds through public immiseration. Politics made the asset-manager society. It is poised to redouble its grip on our social life. It is time for a reset.