Thames Water to launch fundraising in coming weeks amid cash crisis

The company, which serves about 16 million people, confirmed in a statement that it had been in talks with potential funders since July

Thames Water has announced it's gearing up to raise fresh funds from investors in the next few weeks.

The water giant, struggling under financial strain, revealed it has been courting potential backers since July and is now set to initiate its official "equity solicitation process" shortly. This fundraising effort is likely to extend past December, when Ofwat, the industry regulator, is due to announce its final decision on how much water companies can charge customers from 2025 to 2030.

Serving around 16 million customers and tangled in a funding dilemma, Thames Water admits its cash reserves will dry up by May 2025 unless new capital is secured. With over £15bn of debt, Ofwat is preparing to bring in an independent monitor to watch over Thames Water's recovery plans.

Without an injection of new funds, the firm risks being nationalised next year, a scenario the Labour Government wishes to avoid. Thames Water is also dealing with the backlash of proposed sharp increases in water charges, alongside controversy surrounding the widespread pollution of waterways due to sewage overspills.

As per the last update on August 31, the company held about £1.57billion in liquid assets, but regulations tie up £380million of this as "reserves" for its funding commitments. The company disclosed last Friday that it's seeking permission from creditors to tap into that £380million reserve, warning that without these funds, it will hit a financial standstill by year's end.

In the event of needing additional funds to last until May, it has two more potential sources. It can tap into £420million of Class A and Class B "undrawn committed facilities", which act as a form of credit agreement. There's also a £550million pot of "undrawn reserve liquidity facilities" at its disposal, the company revealed. With all this funding in hand, it's set to make it through to the end of May 2025.

To push past that date, the company is gearing up for a fresh round of fundraising in the upcoming weeks.