Thames shareholders to fund £2bn of extra expenditure and inject new equity

Thames Water’s shareholders have committed to inject substantial new equity into the business, and to an extra £2bn of expenditure to fund performance improvements before the end of the current regulatory period.

Investors have pledged an initial £500m of equity this financial year, with plans for an additional £1bn to be approved before 2025, as long as Thames’ multi-AMP turnaround plan being driven by chief executive, Sarah Bentley, and her new executive team is on track.

The £2bn extra expenditure – which will be split across water, wastewater and customer service and fund improvements to leakage, river health and more – boosts the business plan agreed as the PR19 final determination from £9.6bn to £11.5bn. It will accelerate the progress of turnaround and help to set Thames up for a PR24 final determination that enables its ongoing recovery.

Bentley said: “One year into the turnaround, 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.

“We’re also aware that none of the programme can be delivered without significant capital investment. 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. We warmly welcome their continued support.”

The deal has been a product of collaboration between involved stakeholders including the executive leadership team, shareholders and Ofwat, which has brought considerable pressure to bear on the sector’s highly leveraged companies to strengthen their financial resilience.

The announcement came on the last day of the tenure of former Ofwat chair, Jonson Cox. He said: “Our discussions over the past year with Thames Water's chair, Ian Marchant, and chief executive, Sarah Bentley, about the need to strengthen the company's financial resilience have been constructive. 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.”