A Thames Water logo is seen on a sign in London, Britain, February 17, 2025. REUTERS
LONDON, June 3 (Reuters) – Thames Water said U.S. private equity firm KKR (KKR.N), had pulled out from a multi-billion pound rescue plan, reigniting fears that Britain’s biggest supplier will need to be nationalised to avoid financial collapse.
The company has been pushed to the brink by its 18 billion pound ($24.35 billion) debt pile, and was banking on KKR investing about 4 billion pounds in new equity to stabilise its finances.
The government has said it is on standby in case Thames Water fails to recapitalise and needs to go into temporary nationalisation to keep services running.
The utility is at the centre of a public backlash against the water sector which has been blamed for polluting Britain’s rivers and seas while hiking bills, paying dividends and failing to invest in infrastructure.
Separately on Tuesday, a government-commissioned review said water regulation in England and Wales needed to be overhauled after multiple financial and environmental failures.
Thames Water’s bosses said in mid-May that the company would need relief from fines issued by regulators, which it estimated could reach 900 million pounds between 2025 and 2030, to help it attract equity and avoid nationalisation.
Last week Thames was fined 123 million pounds for sewage failures.
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KKR did not immediately respond to a request for comment on why it had pulled out after Thames Water said in its statement: “KKR has indicated that it will not be in a position to proceed”.
Thames Water chairman Adrian Montague said the company would proceed with discussions with senior creditors, who have presented their own alternative plan, likely to involve a debt for equity swap.
A group of those creditors provided an extra loan in February, which only underpins the finances of Thames Water until May 2026.
Montague said it was “disappointing” that the company’s preferred partner had decided to pull out after completing two months of due diligence.
Thames Water said in March it was aiming to secure new funding by the end of June, after an equity raise process involving six bidders.
The Labour government, trying to get on top of the scandal, tasked a former deputy governor of the Bank of England, Jon Cunliffe, with reviewing the sector, and at that time ruled out renationalising the privatised water industry in England and Wales.
His interim report released on Tuesday said stronger, and better coordinated, regulation was required, while risk needed to be reduced around the companies to attract investors willing to accept lower returns over the longer term.
Reporting by Sarah Young in London and Yadarisa Shabong in Bengaluru; additional reporting by Anousha Sakoui, Editing by Mrigank Dhaniwala, Kate Holton and Tomasz Janowski