Thames Water could be nearing renationalisation after its preferred funding partner, US private equity giant KKR, walked away from a proposed £4 billion investment.
KKR had been named the company’s “preferred partner” in March and had completed due diligence, drafting a funding plan. However, the UK’s largest water supplier confirmed in a statement that KKR has now “indicated that it will not be in a position to proceed.”
Thames Water, weighed down by around £20 billion in debt, continues to face mounting pressure following a series of environmental breaches—including a recent £123 million fine for sewage mishandling. With KKR no longer pursuing a £4 billion investment, the utility is now in talks with senior creditors to explore alternative financial solutions, including a potential debt-for-equity swap aimed at stabilising its finances and avoiding state intervention.
Reuters has the details:
KKR’s withdrawal sent Thames’ 2040 bond down 4 pence in the pound to 69 pence, while its euro-denominated April 2027 bond dropped 2 euro cents to just under 68 cents.
Thames Water, which provides services to 16 million people across London and the Thames Valley, has come under sustained criticism for pollution incidents, rising customer bills, and years of underinvestment. With its financial position increasingly precarious, the company’s future now depends on its ability to secure fresh funding and deliver meaningful reforms—efforts seen as crucial to averting potential state intervention.
Thames Water turns to regulator and creditors as KKR exits rescue talks
Thames Water will resume discussions with Ofwat and its bondholders after the collapse of a £4 billion rescue deal with KKR, which had been acting as the company’s preferred funding partner since March.
With KKR stepping back despite completing due diligence and preparing a funding plan, its preferred partner status has now lapsed. The company will now pursue alternative solutions, including a senior creditors’ plan aimed at securing a sustainable recapitalisation.
Thames Water chairman Sir Adrian Montague acknowledged the setback, stating:
“Whilst 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.”
He confirmed that talks will now progress with Ofwat and other parties.
Last month, Bloomberg reported that KKR was considering an £8 billion write-down of Thames Water’s debt. The utility, which recently secured court approval for a £3 billion emergency loan, had also received five rival approaches—mostly from existing bondholders—before selecting KKR. At the time, the company aimed to finalise terms with KKR by the end of June and raise funds before year-end.
