Abu Dhabi sells 9.9% of Thames Water

Abu Dhabi’s sovereign fund has written-off its investment in Thames Water, a blow for the Labour government who is preparing to host a summit to attract large institutional investors to the UK.

Accounts filed in June by a Luxembourg-registered subsidiary of the Abu Dhabi Investment Authority (Adia), which holds a 9.9 per cent stake in Thames Water’s parent company, said that it had written down the entire value of its investment “due to the challenging regulatory environment and operational performance”.

Rachel Reeves wants to convince investors around the world that Britain is open to business, despite the Budget that will be presented at the end this month, which is expected to raise taxes on wealth.

The summit next week, which is likely to be opened by Prime Minister Keir starmer, is intended to promote UK investment, including large infrastructure projects.

Investors are worried about what they see as a more stringent regulatory regime. Ofwat, a sector regulator, issued a draft determination in June for water companies that prohibited them from increasing customer bills by the amount they requested for the next five year period.

Jon Phillips is the chief executive of Global Infrastructure Investor Association. He said that “some 30 international investors are potential investors in UK energy, transport, and digital infrastructure.” Their perceptions are still coloured by the experience they have had in water where regulatory issues remain a concern.

Ofwat should give more priority to making the industry investable when it makes its final decisions for the next five-year period. Adia, who bought its Macquarie stake in 2011 from Adia declined to comment about the writedown. A spokesperson for the government said that it closely monitored Thames Water which was “stable”.

The spokesperson continued: “Our Water Bill (Special Measures Bill) will create an even playing field by strengthening regulation, and secure £88bn in private sector investment to upgrade crumbling infrastructure and boost economic growth, as well as create thousands of high-paying jobs across the country.”

According to an invitation list, Guy Lambert, Adia’s head of utilities was invited last month to a meeting with Steve Reed, environment secretary. Investors complained during the meeting about the regulation of water industry according to those familiar with the situation.

The Thames crisis-hit company, which provides water, sewerage and other services to 16mn English households, is struggling with a £19bn in debt and may run out of money by Christmas.

The utility must raise at least £3bn in equity by 2025 to avoid being renationalised and to make improvements to its infrastructure between 2025 and 3025. Adia and other existing investors, including a Chinese sovereign fund and a Canadian Pension Fund, have refused to invest more equity in the company and are willing accept losses up to £5bn.

According to accounts filed in July, Adia reduced the value of its share from £263mn down to £1 by the end of the last year.

The write-down follows a Singapore registered subsidiary of Thames Water’s largest shareholder, Ontario Municipal Employees Retirement System. In May, the company said that it would “completely write down” its 31 percent stake and also write off loans made to the utility. The Universities Superannuation Scheme (, UK pension fund) has also stated that its stake in Thames Water is now worth “minimal value”.

Adia is also one of Thames’s largest shareholders and has taken a complete write-down of a £31mn credit granted to one of the holdings that own Thames.

Adia owns 16.7 percent of Anglian Water, another UK water and sewerage service provider that serves 7 million customers.

Ofwat stated: “We received responses from many organizations, including water companies and customers, environmental and consumers’ organisations and investors, on our draft 2024 Price Review decisions. These responses reflect the diverse views that people have on our proposals. We will carefully consider all these responses and announce our final decision on December 19.