Gates Foundation Trust ups stake in UK prison firm

Gates Foundation Trust is buying more shares of Serco, which runs six UK for-profit prisons nearly filled to capacity.

Bill and Melinda Gates
The investment arm of the Bill and Melinda Gates Foundation is increasing its stake in the for-profit UK prison operator Serco [File: Chris Ratcliffe/Bloomberg]

The Bill & Melinda Gates Foundation Trust increased its stake in one of the U.K.’s largest for-profit prison operators.

The trust, the Gates foundation’s investment arm, added nearly 200,000 shares of Serco Group Plc in May, according to data compiled by Bloomberg. That took its holding to 3.74 million shares worth about 5.3 million pounds ($6.6 million), a tiny fraction of the foundation’s total assets of about $48 billion.

The Serco shares were added to the portfolio by an outside asset manager with discretion over individual investments, according to a spokesman for the trust, who said holdings are regularly evaluated for performance and fit. The foundation’s staff have no influence over the trust’s investment decisions, according to its website.

Serco runs six for-profit prisons in the U.K., all of which are nearly filled to capacity. Britain holds a bigger proportion of inmates in for-profit prisons than any other country except Australia, and the market is dominated by three companies: Serco, G4S Plc and Sodexo SA. In January, Serco was handed a 1.9 billion-pound, 10-year government contract to provide support services for asylum seekers.

The company has had its run-ins with the government. A Serco unit earlier this month agreed to pay 19.2 million pounds to settle a six-year probe into false accounting related to overcharging for electronic tagging of criminals. And that contract for asylum support services came after millions of pounds of penalties in recent years for missing contractual performance requirements.

The Gates foundation acquired an initial stake of more than 600,000 Serco shares in 2014, shortly after liquidating its stake in G4S, the world’s biggest security-services provider, which drew criticism for its contracts with Israel’s prison system.

Source: Bloomberg