Thames Water plots £1.5bn cash call to turn reputational tide

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Thames Water is to tap shareholders for £1.5bn of new equity in an effort to accelerate its transformation plan, months after it was hit by the latest in a string of regulatory fines.

Sky News has learnt that Britain’s biggest water utility is expected to announce on Thursday that its existing investors have agreed to inject £500m into the company in the current financial year.

That sum will be supplemented by a further £1bn between the end of this year and the end of the current regulatory period in 2025, according to people briefed on Thames Water’s plans.

The new funding, which is likely to have been notified in advance to Ofwat, the water industry regulator, is expected to form part of a sizeable sum of money being earmarked by Thames Water’s board to improve the company’s dire track record on leaks and customer service.

One source suggested that that sum could be as much as £2bn more than the £9.6bn settlement agreed with Ofwat for the five-year period commencing in April 2020.

Shareholders including China Investment Corporation, the country’s sovereign wealth fund; the Universities Superannuation Scheme, the UK’s biggest private pension fund; and Infinity Investments, a subsidiary of the Abu Dhabi Investment Authority, are said to have endorsed the plans.

Serving roughly a quarter of Britain’s population, Thames Water has seen its reputation battered by revelations about its cavalier approach to pollution and indifferent treatment of customers.

A year ago, it was fined £4m for allowing untreated sewage to escape from London sewers into a nearby river and park, while in August last year, it was ordered to pay £11m for overcharging thousands of customers.

Under Sarah Bentley, who joined as chief executive two years ago, the company has pledged to deliver better results for both customers and the environment, at a time when Britain’s privatised water companies are under pressure for paying substantial dividends.

In total, tens of billions of pounds have been handed to shareholders in water utilities across Britain since privatisation, stoking public and political anger given the industry’s frequent mishaps.

Earlier this week, Pennon Group, the listed company which owns South West Water, was added to a list of suppliers being investigated by Ofwat over their management of wastewater treatment works.

Thames Water, which is chaired by Ian Marchant, former boss of the energy company SSE, did not respond to a request for comment on Wednesday night.

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