Thames Water in talks over £3.3bn emergency fundraising deal

Thames Water has been in contact with Brookfield Infrastructure Partners and Global Infrastructure Partners about a £3.3bn emergency fundraising deal to help pay off some of the struggling utility’s large debt pile, according to reports.

The firm, which is the largest of Britain’s privatised regional monopolies, has set itself a deadline of early November to assemble potential investors for the equity raise, according to the Telegraph.

It has also reportedly approached US fund Stonepeak.

Last month, Thames Water was made to appoint an independent monitor and develop a “suitable” turnaround plan by regulator Ofwat after its credit rating was downgraded to “junk” by Moody’s.

Ofwat also hit the water company with a £104m fine related to the companies’ poor management of wastewater treatment works and wider sewer networks, including their operation of storm overflows.

Analysts estimate Thames Water’s debt to be around 80 per cent of its enterprise value, making it the most heavily leveraged water company in England and Wales.

It has asked Ofwat for powers to raise bills by 44 per cent over the next five years to help pay off its debt, but the regulator said that Thames Water could raise bills by 23 per cent over the period in a draft decision in July.

Last week, Thames Water appointed restructuring specialist Aidan de Brunner to its board.

In addition to the bid by the company for overseas investors, a group of Thames Water’s creditors have hatched their own plan to save the company by investing fresh equity of their own into the business. They have already invested £10bn, according to the Telegraph.

If neither solution bears fruit by the last week of November, Thames Water could slide into special administration.

City A.M. has approached Thames Water and Stonepeak for comment.

Brookfield Infrastructure Partners and Global Infrastructure Partners declined to comment.