BBC News business reporter Mitchell Labiak announced that Thames Water has selected US private equity giant KKR as its favored partner for the potential purchase of the beleaguered water utility company. This move comes as Thames Water looks to address its significant debt burden, with hopes of finalizing the transaction in the latter part of this year. The UK’s largest water company began seeking new investment opportunities last year in response to concerns surrounding potential collapse or nationalization.
Thames Water, known for serving approximately a quarter of the UK’s population in London and parts of southern England, has faced criticism for sewage spills and struggles to repair leaks and update its aging infrastructure. Despite ongoing challenges, the company managed to secure a substantial £3 billion rescue loan earlier this year, preventing the need for government intervention. Various firms expressed interest in acquiring a stake in Thames Water, prompting the next phase of the investment process with KKR, a prominent private equity firm with a global investment portfolio totaling $160 billion.
While details of KKR’s investment amount remain undisclosed, Thames anticipates that the proposal will result in a significant reduction of debt and interest owed by the company. Regulatory approval is required for any binding proposal to move forward, emphasizing Thames Water’s commitment to strengthening its financial position, implementing strategic turnaround initiatives, and prioritizing the interests of customers, taxpayers, and the broader economy. In the wake of privatization in 1989, Thames Water operated debt-free; however, heavy borrowing over the years led to a current debt level of approximately £19 billion, a significant portion of which accumulated during ownership under Australian infrastructure bank Macquarie. Critics have pointed to substantial financial gains extracted from the company by Macquarie through loans and dividends, fueling ongoing debate over the company’s financial management and operational practices
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