US private equity firm, KKR, has announced today it is pulling out of plans to buy the country’s largest water company, Thames Water.
KKR had been selected as the preferred partner, with plans to inject £4bn into the troubled water company.
The KKR withdrawal coincides with the release today of interim findings from the Independent Water Commission, in which Sir Jon Cunliffe, Chair of the Commission, sets out five areas where he believes wide-ranging and fundamental change is needed to reset the water sector in England & Wales.
Thames Water Chairman, Sir Adrian Montague, said:
“While today’s news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal.
“The company will therefore progress discussions on the senior creditors’ plan with Ofwat and other stakeholders. The board would like to thank the senior creditors for their continuing support.”
Commenting on this morning’s news that KKR has pulled out of plans to invest in Thames Water, the Chair of the EFRA Committee, Alistair Carmichael MP, said:
“In our evidence session with Thames Water bosses in May we raised serious concerns that Thames had only pursued one bidder at an early stage for its takeover bid, against the wishes of Ofwat, and highlighted the risks this could pose if KKR chose not to proceed. Unfortunately, our concerns have been realised, putting Thames in a perilous position.
“The Government has shied away from acknowledging the potential impact of this scenario on the public finances and must ensure that any takeover is in the public interest and does not line the pockets of financial institutions further to the detriment of customers and operational performance.”
Thames Water now intends to progress discussions on the senior creditors’ plan with Ofwat and other stakeholders. Potential outcomes could include a creditor-led recapitalisation plan, or a temporary government nationalisation.
