A Hong Kong infrastructure company, CK Infrastructure Holdings (CKI), is reportedly a leading contender to acquire Thames Water if the heavily indebted utility collapses in the coming weeks, according to The Times. CKI, which already invests in UK power and utility companies, is among those preparing bids if Thames enters a special administration regime (SAR).
CKI has indicated it would operate under tougher penalties for environmental breaches than Thames's class A creditors, who have also submitted a purchase bid. The creditor group argues that the company cannot afford an expected £1 billion in fines from the regulator for breaches such as illegal sewage dumping. In May, Thames was fined a record £104 million for environmental violations.
Environment Secretary Steve Reed has stepped up preparations for a potential SAR, effectively a form of temporary nationalisation. On Tuesday, the government confirmed it had appointed FTI Consulting to make contingency plans, positioning FTI as the likely administrator if an SAR is enacted, pending court approval.
Campaigners have urged Reed not to sell Thames immediately after an SAR, advocating for nationalisation instead. River Action wrote to Reed warning that writing off debts only to sell to another foreign investor would be a “profound betrayal of the public.” Amy Fairman, the group's head of campaigns, said the crisis offers a chance to rebuild Thames for public benefit, not private profit.
Thames, which supplies 16 million customers in London and the South East, has been racing to secure a deal to avoid collapse. The Treasury fears a potential £4 billion bill from an SAR could fall on Reed's department. Earlier this year, preferred bidder KKR pulled out, and class A creditors are now in talks with Ofwat about a capital injection. Thames has £17.7 billion in net debts and gearing of 84.4%.
CKI previously expressed interest and wrote to Thames chair Sir Adrian Montague after KKR's withdrawal. Ministers are reassured by CKI's experience with UK Power Networks, but some MPs have raised concerns about its Beijing links, as China's sovereign wealth fund owns 9% of Thames. Former Conservative leader Iain Duncan Smith said a CKI acquisition “should be avoided at all costs.” A Thames spokesperson said the company's focus remains on a market-led recapitalisation.
