US private equity giant KKR has submitted a preliminary £4bn bid to take a majority stake in Thames Water, positioning itself as a leading contender to acquire the embattled UK utility, according to a report by the Financial Times.
Unlike some rival bidders, KKR plans to keep Thames Water intact rather than breaking it up or selling off assets to fund its offer.
The bid follows a key legal victory for Thames Water in London’s High Court, which granted the company permission to raise up to £3bn in high-cost debt. The decision provides the utility with crucial time to attract fresh equity investment. KKR’s offer, part of a competitive bidding process managed by Rothschild & Co, was submitted by the 10 February deadline.
The report cites people familiar with the matter as highlighting that KKR aims to negotiate a consensual restructuring of Thames Water’s nearly £20bn debt rather than placing it into the UK government’s special administration regime.
KKR is among several interested parties, including CK Infrastructure — a subsidiary of Hong Kong’s CK Hutchison — and Castle Water, an independent supplier. Both KKR and CK Hutchison already hold stakes in Northumbrian Water, which could pose regulatory challenges if either firm succeeds in its bid for Thames Water.
Meanwhile, Northumbrian Water has announced it will appeal to the UK’s Competition and Markets Authority (CMA) regarding its pricing settlement with water regulator Ofwat. This appeal is part of a broader dispute involving multiple UK water companies, including Thames Water.
Infrastructure investment firm Covalis Capital has also submitted a bid but with a different strategy — breaking up Thames Water to extract value. This proposal has reportedly caused friction with Thames Water and its advisers due to Covalis’s holdings in the company’s lower-ranking class B bonds.
Court hearings earlier this month revealed that Thames Water’s senior class A creditors were preparing a potential “creditor bid” as a backup if the Rothschild-led bidding process fails. This bid could involve US hedge funds Elliott Management and Silver Point.
Rothschild & Co is expected to select credible bidders by the end of February, with those advancing to the next stage submitting binding offers in the second quarter of 2025. The due diligence phase is expected to last around eight weeks.
