KKR gears up to rescue Thames Water with billion-pound plan

In the United Kingdom, KKR, a major private equity firm managing over $600 billion in assets, is taking significant steps towards aiding Thames Water, the country's largest water supplier, which is currently facing severe financial distress. Thames Water has reported an overwhelming £19 billion in debt and risks entering a special administration process, which could cost the government billions while looking for a buyer or restructuring the company. KKR has engaged PJT Partners as their financial advisors to formulate a proposal for raising equity funds, with a deadline approaching for submissions later this month. The financial turmoil surrounding Thames Water was exacerbated by ongoing political and legal struggles as rival creditor groups vie for control over potential financing solutions. One lender syndicate is proposing to inject up to £3 billion into Thames Water to help stabilize its operations, while another group is advocating for an alternative restructuring plan that promises to be more economical. This legal battle is set to unfold in the High Court, which has become a crucial battleground for determining the future financing of Thames Water and addressing its dire financial situation. Public and governmental scrutiny of Thames Water has been mounting, with critics highlighting its rising debt and issues pertaining to regulatory compliance. Liberal Democrat MP Charlie Maynard criticized the company's management, claiming it needs a complete overhaul in the context of the UK's water supply requirements. Despite Thames Water's request to increase customer prices by 53% over five years, the regulator has restricted this to 35%, further straining its financial capacity. The government, facing public backlash, is keen on avoiding a repeat of historic cases, such as the domestic energy supplier Bulb, where intervention through special administration was necessary. In addition to KKR, other investors such as CK Infrastructure Holdings, Covalis, and Castle Water have shown interest in potentially providing financial assistance as Thames Water seeks to restructure its operations. As negotiations and court proceedings continue, industry insiders speculate that KKR and CK Infrastructure may offer the most viable solutions in terms of an equity raise. However, uncertainty remains regarding the final details of KKR's eligible investment funds and whether their interest will culminate in substantial financial proposals.