Thames Water bid could see struggling firm split up

Embattled Thames Water could be broken up under a takeover planned by investment firm Covalis and French utility group Suez.

Britain’s biggest water supplier is scrambling for a multi-billion-pound emergency cash injection to avoid a taxpayer bailout.

Potential bidders for the debt-laden utility also include Hong Kong-based firm CK Infrastructure Holdings, which owns Northumbrian Water.

And Castle Water, a firm co-owned by Conservative Party treasurer and property tycoon Graham Edwards, has proposed pumping around £4billion into Thames Water in return for a majority stake, with a plan for a stock market listing within three years.

The offer from Covalis, a London-based utility investment firm, involves a £1billion payment up front, plus another £4billion from planned asset sales and refinancing. That could include selling individual pieces of infrastructure such as tunnels, then leasing them back.

But they could also involve hiving off entire regions that Thames Water serves, such as the Thames Valley.

Suez, which runs major water services in France, would act in an advisory role and would not own any shares in Thames Water. The Government would hold a so-called golden share, giving it a seat on the board.

The offer is dependent on regulator Ofwat allowing the firm to slow down its infrastructure investment programme.

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