Thames Water is grappling with a £16 billion debt burden while contending with persistent issues such as widespread leaks and sewage overflows. The company urgently requires at least £3.3 billion in new equity after its current shareholders deemed it “uninvestable” earlier in the year. Without securing fresh funding, Thames Water may have no choice but to seek special administration.

However, investors have shown limited enthusiasm for Thames Water’s equity raise, with several key contenders opting out of the process and doubts emerging about the feasability of one offer.

In an article looking at potential bidders, and in particular the case of Castle Water, Tim Whittaker, Research Director at EDHEC Infrastructure & Private Assets Research Institute, commented:

“To allow this takeover without stringent conditions would demonstrate that the regulator Ofwat is desperate to avoid the special administrative regime.” 

“It remains to be seen if Castle could raise the equity required to support the investment and pay down Thames’ debt to a more sustainable level all the while earning the return that Ofwat has allowed for the next regulated period.”

🔗 Read the full article.

🔗 Consult our research paper, “Low Tide: What the Data Showed About Thames Water”.