Thames Water has asked investment giants Brookfield Infrastructure Partners, and Global Infrastructure Partners for help in a £3.3 billion fundraising effort to save the utility.
Rothschild has given the company a deadline for assembling potential investors to raise equity. This is set at early November. Stonepeak, a US-based fund, was also reportedly approached.
The success of the project is still unclear, especially as Ofwat won’t rule on the amount Thames can raise its bills and spend on upgrading the network until December.
In its draft July decision, the regulator stated that Thames could increase bills by 23% over the period. This was a far cry from the 44% it requested.
In the belief that the effort will not succeed, a group of Thames’ creditors who have loaned the heavily indebted company about £10 billion are currently working on their own plan to rescue the company. Their plans would allow creditors to invest their own equity in the company, which provides water to over 15 million households throughout the southeast.
Sources in the city said that they hoped both plans would merge eventually, providing the cash injection the business requires and preventing a temporary nationalisation.
The board of Thames announced last week that restructuring expert Aidan de Brunner had been appointed to the position. Ofwat has ordered Thames to strengthen its board by appointing two new members after the company breached their operating licence earlier this year when its debt was reclassified as “junk”.
The announcement came after Steve Reed, Secretary of State for Environment, Food and Rural Affairs, met with global infrastructure investors at a round-table event last week. Reed emphasized that Ofwat’s tough pricing could discourage foreign investment in water.
Thames, Brookfield, and GIP have not commented.
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