Thames Water ordered to raise equity

Thames Water, the UK’s largest water company, is in the process of securing essential funding after its owners labeled the utility “uninvestable.” The announcement came from the industry regulator, Ofwat, on August 23, 2024, as the company grapples with a staggering £18 billion in debt. Ofwat has mandated that Thames Water must “use all reasonable endeavours” to raise new equity following a breach of its operational license conditions. The regulator has engaged with third parties regarding Thames Water's proposed measures to rectify the breach. As part of the response to the financial crisis, Thames Water has been instructed to revise its business plan after failing to gain approval for a significant 40 percent increase in household charges. This situation has raised concerns among stakeholders about the feasibility of attracting new investments given the company’s precarious financial standing. In light of these challenges, Ofwat acknowledged the skepticism surrounding new investments in Thames Water but emphasized the company's commitment to pursue necessary funding. The current ownership group, which includes the Canadian pension fund Omers and the Universities Superannuation Scheme, has indicated a willingness to inject up to £3.5 billion in new equity. This capital infusion aims to enable Thames Water to manage its debt more effectively and enhance its investment capabilities. As Thames Water navigates this financial turmoil, the outcome of its funding efforts remains critical for its operational stability and service to its 16 million customers across London and the southeast.