Receive free Thames Water PLC updates
We’ll send you a myFT Daily Digest email rounding up the latest Thames Water PLC news every morning.
Thames Water has secured a £750mn investment commitment from shareholders over the next 18 months but the troubled UK water company has warned it will need a further £2.5bn by 2030.
The equity injection is conditional on Thames Water, which is being closely monitored by the government in case it collapses, making a new business plan. It is in addition to £500mn invested in the company in March.
“This further funding is subject to satisfaction of certain conditions,” the company said in a stock market announcement on Monday morning.
“This includes the preparation of a business plan that underpins a more focused turnround that delivers . . . performance improvements for customers, the environment and other stakeholders over the next three years,” it added.
Thames Water provides water and sewage services for 15mn customers in London and surrounding areas and is under pressure to increase investment and improve services following a public outcry over sewage overflows and leaks.
Fears about the company’s finances erupted last month after chief executive Sarah Bentley abruptly quit just two years into an eight-year restructuring plan. Cathryn Ross, a former chief executive of regulator Ofwat, has been appointed interim chief executive.
The company said it had £4.4bn of liquidity but had been hit by the rapid rise in interest rates over the past 18 months, which increased the costs of servicing its £16bn of debt.
Its crisis is driving a debate about whether the water industry, which was privatised under Margaret Thatcher’s government in 1989, should be renationalised to secure investment to upgrade ageing infrastructure and address the challenges of climate change.
Thames Water was owned by Australian investment firm Macquarie for just over a decade until 2017. During this time, the owners took almost £3bn in dividends.
The company’s largest shareholder is now the Ontario Municipal Employees Retirement System, with a 31 per cent stake. Other investors include the UK’s Universities Superannuation Scheme, Chinese and Abu Dhabi sovereign wealth funds and infrastructure fund Aquila GP.
Thames Water is not the only water company struggling with debt. The finances of four other companies — Southern Water, SES Water, Portsmouth Water and Yorkshire Water — are also under scrutiny by regulator Ofwat.
Equity injections into water companies have been rare since privatisation. But Yorkshire Water received £500mn from investors last month and Southern Water said on Friday it would seek £550mn from shareholders to shore up its finances.
Ofwat has said that if water company credit ratings fall to a certain level it will block shareholder dividends.