KKR Pulls Out of Rescue Deal: Major Blow to Thames Water
Thames Water’s efforts to avoid nationalisation have been dealt a major setback after U.S. private equity firm KKR walked away from a potential £4 billion investment deal.
KKR had been chosen as the preferred bidder to acquire an equity stake in the debt-ridden utility, which is grappling with a £20 billion debt burden. The firm had reportedly developed detailed turnaround plans and was seen as a crucial partner in Thames Water’s push to secure much-needed funding by the end of June.
However, Thames Water confirmed that KKR has now withdrawn from talks, describing the move as “disappointing.” The company said KKR “has indicated that it will not be in a position to proceed,” and its preferred bidder status has officially lapsed.
Chairman Sir Adrian Montague acknowledged the blow but remained resolute:
“Whilst today’s news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders,” he said. “The company will therefore progress discussions on the senior creditors’ plan with Ofwat and other stakeholders.”
The collapse of the KKR deal casts serious doubt on Thames Water’s ability to meet its end-of-June equity-raising deadline, a key milestone in avoiding special administration—a temporary form of nationalisation used to protect essential services.
The company is already under heavy scrutiny. Just last week, Ofwat imposed a record £123 million penalty on the utility for serious breaches related to sewage spills and shareholder dividends. In March, Thames secured court approval for a £3 billion emergency financing package from existing creditors to stave off collapse.
Regulators have also agreed to an 18-week delay in referring Thames to the competition watchdog over its proposed bill hikes—giving the utility a window to find a viable market-led solution.
Despite the setback, Thames Water says it remains committed to financial recovery. “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,” a spokesperson said.