What next for CKI in UK water?

(by Verity Mitchell)

CKI, Power Asset Holdings (PAH) and CK Asset (CKA) have announced that they are selling their jointly-owned regulated UK electricity distribution business, UKPN, to Engie for £10.5bn — a 1.5x premium to UKPN's March 2026 regulated asset value (RAV).

CKI will record a 14.5bn Hong Kong Dollar (£1.37bn) profit on disposal. This was a deal, according to CKI, that was “too good to resist”. The sale, combined with its UK rail sale, would result in CKI holding some HKD41bn (£3.8bn) in cash when the deal is completed in the current year, according to analysts. The sale will be subject to regulatory approval, but Engie is in a strong position as a French-listed, well capitalised, integrated European utility with a long-term commitment to investment and growth in renewables.

CKI will now need to consider where to invest the proceeds of the sale. Would Thames still be on the list of targets? Thames' recapitalisation negotiations continue to drag on between its creditors and Ofwat as it spends the last of its emergency funding. In 2026, Thames’ management was heavily criticised by the Government and the alternative bidders, CKI and Castle Water, for favouring only one preferred purchaser. Only KKR was allowed to start due diligence in April and then, when it withdrew two months later, only the A creditor group trading as London & Valley Water remained.

In November 2025, an analysis published by Barclays said that Thames' customer bills could be nearly 20% higher in five years' time if a rescue plan proposed by London & Valley Water for Thames is approved. Barclays' research calculated that the lenders' proposal requires customers to bear some of the future operational and financial risks to the company, adding £116 to bills when they are revised in 2030, and requires additional leniency from the regulator from fines over sewage and spills. London & Valley Water refuted the assertions but no announcements on an agreement are forthcoming to date.

CKI could now be in a position to provide an attractive competing offer. It had stated previously that it was not demanding leniency on fines for pollution incidents and other penalties compared to London & Valley Water. CKI is a long-term utility investor with a track record of strong customer service in the UK — exactly the kind of owner the Government says it would prefer for water companies. It has a proven track record with its long-term ownership of Northumbrian Water. The voices of concern over Chinese government involvement ignore the reality of CKI’s independence.

At its half-year results in August 2025, CKI said about M&A: “We see opportunities to acquire quality assets at reasonable valuations given our ability to take a long-term view, add value from an operational expertise perspective, and manage energy transition considerations. We will, however, maintain our investment discipline and not have a ‘must-win' attitude.”