Thames Water picks US private equity firm KKR as preferred buyer

Thames Water has picked US private equity giant KKR as its “preferred partner” to buy the troubled water utility firm.

The planned investment by KKR would help it deal with its mountain of debt, and Thames is aiming for the transaction to be completed in the second half of this year.

Thames Water started to look for investment last year after its shareholders at the time said the business was “investable“.

The firm has been heavily criticised for sewage spills, and is also struggling to fix leaks and modernise outdated infrastructure.

Thames Water serves about a quarter of the UK’s population, mostly across London and parts of southern England, and employs 8,000 people.

In recent weeks, the company – which has debts of nearly £20bn – secured a £3bn rescue loan to stave off the prospect of the company coming under government control.

Thames had said recently that it had received approaches from six firms about possible investment in return for a stake in the business.

It did not say how much KKR planned to invest, but said the proposal would lead to a “material impairment” for some creditors, meaning a write-off of some of the debt and interest Thames Water owes.

Thames added there was no certainty that a binding proposal would emerge, and it would require regulatory approval.

“The company remains focused on putting Thames Water on a more stable financial foundation, implementing its turnaround plan and delivering a market-led solution that is in the best interests of customers, UK taxpayers and the wider economy,” it said.