Hi Robert,

Right now, nationalization is only being pushed by Labour, which remains out of power.

But eventually, Labour will be in power again. The question is whether Opposition Leader Jeremy Corbyn’s success in last year’s election will pull Labour further left longer term. Corbyn is a former backbencher whose recent ascent came courtesy of his own party’s political turmoil.

However, as evidenced by the proposal to nationalize the country’s utilities, Corbyn is more a man of the hard left than former centrist Labour Party leaders such as Tony Blair.

Until recently, Corbyn wasn’t all that popular within his own party. But success changes everyone’s political calculus.

That means we can’t dismiss the possibility of nationalization. After all, Grid was privatized just 27 years ago.

Even so, it would still take considerable arm-pulling and substantial funding to nationalize Grid. It’s possible that a half-measure, such as building up toward a controlling stake in the public markets, would be done instead. That would be a lot easier since Grid derives nearly 60% of its earnings in the U.S.

Regardless, nationalization would require paying off shareholders one way or another–it just probably wouldn’t be at the sort of valuation that could be commanded in the private sector. In the event of a full split, there would probably have to be a transaction that compensates shareholders for the U.K. business while giving them shares of the U.S. spinoff.

Best regards,
Ari