Investors consider offers for stakes in Thames, reports suggest

As Thames rebuffed Ofwat’s draft determination as ‘not investible’, infrastructure investors were preparing to make non-binding offers for stakes in the company, according to press commentary.

Thames’ business plan assumes that a £2.5bn equity injection may be needed to finance its investments and operations from 2025-2030. In addition, sources say that Thames Water’s main opco lenders are considering restructuring options for their loans, including taking a haircut in exchange for extra equity injections into the business.

Thames has publicly committed to seek additional funds after its existing shareholders have both refused to commit more equity capital and written down the value of their investments to zero. Stonepeak, according to sources, is one of several firms considering making a non-binding indictive offer subject to the terms of the Final Determination from Ofwat due in December. Any offers are likely to be at considerable discount to the implied regulatory capital equity value.

Any new equity partners will further dilute the value of existing shareholders in Thames but there is a precedent in Macquarie Asset Management’s injection of an additional £550m into Southern Water in 2023. 

Rothschilds, appointed by Thames in March 2023, continues to provide advice on its financing options. Thames has not commented on its future financing discussions.