Thames Water has sounded out investment giants Brookfield Infrastructure Partners and Global Infrastructure Partners to pitch in to a £3.3 billion emergency fundraising to save the stricken utility.
The company, advised by Rothschild, has set itself a deadline of early November to assemble potential investors for the equity raise. US fund Stonepeak is said to have also been approached.
It is far from clear whether the effort will be successful, particularly as Ofwat will not rule until December on how much Thames is allowed to increase its bills by, and how much it can spend on upgrading its network, over the next five years.
In its draft decision in July, the regulator said that Thames could raise bills by 23 per cent over the period, far less than the 44 per cent rise it had asked for.
A group of Thames’s creditors, who have lent the heavily indebted utility about £10 billion, are working on their own rescue plan for the company, in the belief that its effort is unlikely to succeed. Under their plans creditors could invest fresh equity of their own into the business, which supplies water to more than 15 million households in the southeast.
City sources said the hope is that both plans could eventually merge, delivering the injection of cash the business needs and averting a temporary nationalisation.
Last week Thames appointed restructuring specialist Aidan de Brunner to its board. Ofwat ordered the company to strengthen its board with two new appointments after Thames breached its operating licence by having its debt fall into “junk” status earlier this year.
It came after global infrastructure investors met Steve Reed, secretary of state for environment, food and rural affairs, at a round table event last week and pressed home the point that a tough price settlement by Ofwat could deter foreign investment in the water industry.
Thames, Brookfield and GIP did not comment.