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France’s Suez Group would help manage Thames Water’s operations as part of a £5bn bid tendered by Covalis Capital for full ownership of the UK’s largest water company.
UK infrastructure investor Covalis plans to sell off billions of pounds of the troubled water company’s assets — including, potentially, entire regions such as the Thames Valley — and then publicly list the remaining rump, with the UK government holding a “golden share” in the utility, according to people familiar with the bid. This would give the government a seat on the board and other rights.
Covalis would provide about £1bn up front on agreement of the deal, the people added. The London-based investor would then raise another £4bn from asset sales, refinancing and the listing, which is expected in two to three years’ time.
Suez, which has contracts to run water assets in France and employs 5,000 people in the UK, would act as the operating partner on the deal and would not own any shares in Thames Water under the agreement it has signed with Covalis, the people close to negotiations said.
Suez confirmed that was in an “exclusive” deal with Covalis to provide a “non-binding offer to advise and assist Thames Water”.
“At this stage, Suez’s scope of work is limited to [an] advisory mission to ensure the project’s success and address the specific challenges faced by Thames Water,” it added.
The deal comes ahead of Thursday’s deadline for indicative bids for Thames Water, which is saddled with nearly £19bn of debt and risks running out of cash in the new year. The utility needs billions of pounds of investment to provide water and sewerage services for its 16mn customers in London and surrounding areas.
Covalis and Thames Water declined to comment.