KKR offers £4 billion in an attempt to rescue and acquire the near-bankrupt Thames Water

According to Zhitong Finance APP, American private equity giant KKR & Co. (KKR.US) has made an acquisition offer of approximately £4 billion (about $5 billion) in an attempt to rescue and take over Thames Water, a UK water utility company on the brink of a liquidity crisis. This largest utility water company in the UK is facing an increasingly swollen debt problem and has warned that it could run out of cash flow by March 24 if urgent measures are not taken.

According to media reports, a source familiar with the situation revealed that Thames Water urgently needs to restructure its debt and capital structure to implement a comprehensive transformation plan, and requires a strong single controller during this process.

Media reports cited the source as saying that the private equity investment firm KKR & Co. plans to provide approximately £4 billion in funding to Thames Water through a management-led buyout to gain control of the struggling UK water company. According to the source, this management buyout initiative will not lead to the sale or splitting of Thames Water's assets.

It is understood that Thames Water is the largest water company in the UK, responsible for providing water services to approximately 16 million customers in London and the Thames River basin—mainly providing water supply and sewage treatment services, accounting for a quarter of the total population in the UK. However, the company has been continuously burdened by heavy debt and has warned that if action is not taken quickly, it will run out of cash flow by March 24 at the latest.

As early as 1989, Thames Water was fully privatized under the leadership of the Thatcher government, and last summer, the company began raising additional capital, ultimately announcing last week that it had received acquisition proposals from multiple parties and was studying each offer.

As of September last year, Thames Water's debt stood at approximately £16 billion. To facilitate the company's restructuring, KKR, headquartered in the United States, plans to inject about £4 billion into Thames Water to acquire a majority stake and carry out a series of reforms to restore Thames Water's normal operations in the UK market.

KKR, the American private equity giant, has been a long-term investor in the UK market, having invested over £20 billion in the UK since 1996. The company established an infrastructure investment platform in 2008, focusing on important projects with long-term investment cycles.

In 2021, KKR acquired the UK infrastructure investment group John Laing for approximately £2 billion, which focuses on investment and management of transportation, social, and environmental infrastructure projects. In 2023, KKR acquired about 45% of the shares in UK energy storage developer Zenobi for approximately $1.089 billion, which focuses on grid-scale battery storage systems, electric vehicle production, and battery reuse. These investments reflect KKR's deep involvement in the UK's infrastructure, energy, and environmental sectors.

Last Tuesday, the UK High Court approved existing shareholders to provide Thames Water with £3 billion in emergency funding to help restructure its debt and seek new investors, buying the company valuable breathing space Thames Water is part of the Kemble Water Group, which is composed of multiple institutional shareholders, most of whom are pension funds and sovereign wealth funds, with the largest shareholder being one of Canada's largest pension plans—the Ontario Municipal Employees Retirement System. This water company has long faced criticism for the sharp increase in sewage discharge in its waterways, including the 215-mile-long River Thames that flows through London