LONDON -- Baroness Thatcher will be remembered for many reforms, but one enduring legacy for investors is that she gave us the stock market we know today.

Privatization became a key plank of economic policy, and nine of the firms in the FTSE 100 are the direct descendants of state-owned companies privatized during her time as prime minister.

Thirty-five years ago, the precursors to BG (LSE:BG), Centrica (LSE:CNA), Severn Trent (LSE:SVT), United Utilities (LSE:UU), BP, BAE, International Consolidated Airlines, BT, and Rolls-Royce were all state-owned enterprises (in a companion piece, I have covered the five industrial and service companies). Today, they are successful blue-chip firms with a combined market capitalization of more than 200 billion.

The gas industry
British Gas, the U.K.'s monopolistic gas utility, was privatized in 1986 in the famous "Tell Sid" campaign to attract private investors.

The downstream operations were spun off as Centrica in 1997. The gas-distribution assets were demerged as Lattice Group and subsequently became part of National Grid in 2002. The remainder, British Gas' upstream activities, became BG Group.

Neither Centrica nor BG stuck to its existing business. Centrica has expanded upstream, and it is now the largest investor in the Cygnus North Sea gas field. A dominant market position in gas distribution has secured good returns for shareholders, and the country's dependence on gas should boost opportunities in the future.

BG moved into, and then back out of, downstream distribution overseas. The retreat was partly to finance development of its massive discoveries in Brazil's Santos Basin, and a significant part of the company's value now rides on how soon and successfully it can start production. It also built a solid and successful international liquefied-natural-gas business.

The water industry
Britain's regional water companies were privatized in 1989. (The electricity-distribution companies followed a year later, just falling outside Margaret Thatcher's premiership.)

Several companies have been snapped up by foreign investors keen to tap into a secure and profitable income stream. Just three listed companies remain: United Utilities in the North West, Severn Trent in the Midlands, and the FTSE 250 company Pennon.

The water companies' fortunes ebb and flow with five-year regulatory reviews, the next of which begins in 2015 and is now being negotiated. Severn Trent has an almost unblemished dividend record; United Utilities less so.

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