Thames Water is making a £1.5 billion investor cash call to help ramp up turnaround efforts as Britain’s biggest water supplier looks to move on from a string of fines.
The UK’s largest provider of water and sewage services, which serves almost a quarter of Britain’s population, said it would raise £500 million in new equity to shareholders this financial year, with plans for another £1 billion.
It revealed it was boosting its current five-year spending plan to March 31 2025 by nearly £2 billion to £11.5 billion, with aims to improve outcomes for customers, reduce leakage and improve river health.
The group’s shareholders include Chinese sovereign wealth fund China Investment Corporation; UK private pension fund the Universities Superannuation Scheme; and Abu Dhabi Investment Authority subsidiary Infinity Investments.
Thames Water still has many issues to address to meet the service and resilience levels we expect, but seeing its shareholders putting in additional investment will help the management team to make the progress needed to deliver on its transformation planJonson Cox, Ofwat chairman
It comes after Thames Water was fined £4 million in May last year for allowing untreated sewage to escape from sewers below London into a park and river, while in August it also agreed to pay out more than £11 million to 13,000 businesses for billing errors.
Sarah Bentley, Thames Water’s chief executive, said: “We have made good progress in fixing the basics and tackling the structural challenges in our business as well as laying the foundations for our long-term recovery.
“However, everyone at Thames is aware that we’re only at the start of our journey and there remains a huge amount to be done and delivered.”
She added: “With this new, substantial equity investment programme our shareholders are both underpinning the investment vital for our improvement and also expressing their confidence in the long-term outlook for Thames Water.”
Water regulator Ofwat welcomed the increased investment plans as a sign Thames Water is “intent to get their house in order”.
Ofwat chairman Jonson Cox said: “Thames Water still has many issues to address to meet the service and resilience levels we expect, but seeing its shareholders putting in additional investment will help the management team to make the progress needed to deliver on its transformation plan.”
Thames Water is one of six utility firms being investigated by Ofwat over their sewage treatment, alongside Anglian Water, Northumbrian Water, Wessex Water, Yorkshire Water and most recently South West Water, which joined the list earlier this week.
In March this year, the regulator said it had serious concerns over the sewage treatment works of the companies.