Debt-laden Thames Water, which is the UK’s biggest water supplier, has asked possible investors to put forward indicative bids by the end of Thursday
Thames Water is the UK’s biggest water supplier (
Image: PA Archive/PA Images)
A water supplier to over 450,000 businesses and public sector groups has reportedly emerged as a front-runner in the race to rescue beleaguered Thames Water ahead of this week’s deadline for bids from potential investors.
Debt-ridden Thames Water, the UK’s largest water supplier, has called on potential investors to submit indicative bids by Thursday’s end as it seeks a multi-billion-pound cash injection to ward off nationalisation. Castle Water, co-owned by former investment banker John Reynolds and Conservative Party treasurer Graham Edwards, is believed to be gearing up to propose a £4bn investment into Thames Water in exchange for a majority stake.
If successful, it reportedly plans to eventually float Thames Water on the stock exchange. Scottish-based Castle Water, which bought out the non-domestic arm of Thames Water in 2017, now serves hundreds of thousands of businesses, charities and public sector groups. It has the support of the billionaire Pears family behind the William Pears Group – a finance and property firm, which is thought to be providing the funding for Castle Water’s bid.
Other potential investors said to be preparing bids include Hong Kong firm CK Infrastructure Holdings and private equity giant KKR, who jointly own stakes in Northumbrian Water. Thames Water, along with its adviser Rothschild, is believed to have approached investment heavyweights Brookfield Asset Management and Carlyle Group.
The water company, which serves around 16 million people, is currently facing a funding crisis and only has enough cash to continue operating until early next year. It requires at least £3.3bn in equity over the next five years, while it is also more than £16bn in debt.
The group has been at the heart of increasing public anger over pollution levels, rising bills, high dividends, and executive pay and bonuses at the UK’s privatised water firms. Regulator Ofwat has appointed an independent monitor to oversee Thames Water as it attempts a turnaround.
However, the process for an equity injection cannot be finalised until after December 19, when Ofwat will deliver its final verdict on Thames Water’s five-year business plan, including proposals for customer bill hikes and investment.
In addition to seeking to raise equity, Thames is also undergoing a debt restructuring and recently appointed Julian Gething – a director of turnaround firm Alix Partners – as chief restructuring officer to manage the process. Thames Water still needs the emergency funding plans to be approved in court though, and is aiming for a December 17 hearing.
