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Your £100 investment

The BBC commissioned the Chartered Institute of Public Finance and Accountancy to investigate just how much £100 invested in 1989 in each of the water companies would now be worth. If you did invest in water company shares when the industry was privatised, chances are that you are feeling pretty pleased with yourself. The shares on average have made around three times more than the money would have done in a deposit account and on average twice as much as investing in the FTSE 100.

In the study it is assumed that investors put their dividends and any cash proceeds from takeovers into building societies to earn interest on them, and held on to their shares. No allowance was made for taxes that some investors would have had to pay. There are two levels of return shown, one for small investors who received discounted shares at privatisation, and one for investors who bought on the first day of trading.

Since 1989 there have been criticisms that the government sold the companies too cheaply when they were floated on the stock exchange. But the water companies say that the high returns they and the investors have made are a reward for the risks that they took on privatisation, which seemed an uncertain prospect at the time.

Value in March 1998 of £100 invested in water companies in 1989.

Other ways you could have invested your £100
FT All-share Index	£285
Building Society	£180

Notes and assumptions:

1. the "At privatisation" calculations assume the shares are held continuously from privatisation until March 1998, thereby qualifying for loyalty bonuses.

2. gross returns are used: ACT and/or CGT may be payable on these figures.

3. it is assumed receipts from dividends and takeovers are invested in a Building Society.

4. Northumbrian Water was taken over by Lyonnaise des Eaux in 1995.

5. Southern Water was taken over by Scottish Power in 1996.

5. North West Water is now United Utilities; Welsh Water is Hyder.