CKI Director Voices Frustration Over Thames Water Exclusion
A director at CK Infrastructure (CKI) has publicly expressed his frustration at being shut out of the process to rescue the heavily indebted water company, Thames Water. Andrew Hunter, co-managing director of CKI, stated he was deeply dissatisfied with the lack of access to bidding opportunities, highlighting the prolonged negotiations that have left the company in financial limbo.
Call for Regulatory Intervention
Hunter has called on the water regulator, Ofwat, to step in and facilitate a competitive sale process. He argued that Thames Water should be owned by an experienced operator, not its current mix of creditors, which includes US hedge funds like Elliott Management and Silver Point Capital. According to Hunter, these entities lack the expertise to run a UK water utility effectively.
"It's hugely important that Thames Water is owned and operated by an experienced, knowledgeable company," Hunter emphasised. He urged both the government and Ofwat to establish a process that ensures a suitable outcome, warning that the current trajectory could lead to undesirable results.
Background of Thames Water's Financial Struggles
Thames Water has been grappling with financial instability for over two years, burdened by £17.6 billion in debt accumulated since its privatisation. Last year, the company attempted to sell itself but faced embarrassment when its preferred bidder, KKR, withdrew at the last minute. Currently, Thames Water is negotiating a £10 billion rescue plan with creditors to avoid falling into government-handled administration, which would effectively amount to temporary nationalisation.
CKI, owned by Hong Kong's richest man, Li Ka-shing, has a proven track record in the UK water sector, having acquired Northumbrian Water in 2011. The company serves 2.7 million customers, compared to Thames Water's 16 million in and around London. CKI also holds significant investments in UK energy through UK Power Networks and Northern Gas Networks.
Political Concerns and CKI's Defence
Despite its experience, CKI has faced political scrutiny over perceived links to China. Former Conservative leader Iain Duncan Smith previously advocated against a CKI acquisition on social media. Hunter countered these claims, noting that CKI was founded in Hong Kong under British rule and is listed in both Hong Kong and London. "I can't control the headlines," he said, asserting CKI's reputation as a respected foreign investor in the UK.
Hunter's Critique of Thames Water's Management
Hunter criticised Thames Water's management for granting exclusivity to KKR, only for the deal to collapse. He suggested that the company's leaders should "eat humble pie" and restart the bidding process to include other potential buyers. "When you grant exclusivity to someone and they walk away, there's a little bit of humble pie to be eaten," he remarked, urging transparency and access to due diligence information previously given to KKR.
While CKI has communicated with Ofwat regarding the matter, Hunter confirmed he has not personally spoken with Environment Secretary Emma Reynolds, whose approval would be necessary for any rescue deal. A spokesperson for Thames Water's creditors declined to comment on the situation.
