Thames Water received preliminary equity bids from six investors, including private equity heavyweights KKR and distressed asset specialist FitzWalter Capital, as it seeks fresh capital to stabilize its finances.

The embattled UK utility, which serves 16 million households and carries nearly £20bn in debt, is aiming to secure billions in new equity by the end of June to stave off insolvency.

Among the strongest contenders are KKR, Hong Kong-based infrastructure investor CKI, hedge fund Covalis Capital, and London-based Castle Water. CKI has reportedly expressed the most serious commitment, proposing a £7bn capital injection. US infrastructure investor Stonepeak, which manages over $70bn in assets, and FitzWalter Capital, known for distressed debt investments, have also submitted proposals but are seen as less likely to proceed with firm bids.

The process remains fluid, with all bids currently non-binding. FitzWalter’s proposal suggests a minority equity investment in partnership with other investors rather than a full takeover. The firm also holds lower-ranking Thames Water bonds that could suffer heavy losses under the utility’s £3bn loan deal with senior creditors. Covalis, another bidder, has been openly critical of how Thames Water and its adviser, Rothschild & Co, have handled the equity raise.

Beyond private equity interest, Thames Water’s senior bondholders, including US funds Elliott Management and Pimco, are preparing a backup creditor-led bid if the equity raise fails. Some bids may also include options for creditors to convert part of their debt into equity, potentially reshaping the company’s financial structure.

As Thames Water faces mounting financial pressures, the outcome of this equity raise could determine the future ownership of one of the UK’s largest utilities, marking another significant move by private equity and distressed asset investors into critical infrastructure.

Source: Financial Times