Infrastructure fund HICL flags UK nationalisation risks

LONDON (Reuters) - The debate over Britain's departure from the European Union could lead to an early change of government and the risk of nationalisation of public infrastructure assets, infrastructure fund manager HICL said on Wednesday.

Britain's opposition Labour party wants to nationalise energy and water infrastructure if it can oust Prime Minister Theresa May's ruling Conservatives from power, reversing decades of pro-privatisation public policy.

The likelihood of May's centre-right Conservative minority government lasting until the next scheduled general election in 2022 has been reduced because arguments over Brexit have split the party, paralysing policymaking and causing its poll ratings to slide.

"A wholesale nationalisation programme faces considerable hurdles to implementation," HICL, which focuses on long-term infrastructure investment in Britain, Europe, North America and Australasia, said in its annual results statement.

But it highlighted "the perception of this risk and the adverse impact of it on investor and stakeholder sentiment".

In an attempt to soothe investor nerves, UK utility Thames Water last month added a clause to its outstanding bonds ensuring lenders are paid back immediately should the company be nationalised.

HICL, which in April switched its domicile to Britain from Guernsey, reported a 5% increase in net asset value per share to 157.5 pence for the year ending March 31.

(This story changes HICL's domicile in paragraph seven)

(Reporting by Carolyn Cohn; Editing by Mark Potter)