Octopus Power wades into battle for Thames Water’s future

Octopus Power Group is wading into the battle for the way forward for Britain’s largest water firm as a part of a consortium which incorporates the French infrastructure big Suez.

Sky Information has learnt that Octopus Power – which not too long ago overtook British Gasoline as Britian’s largest family fuel and electrical energy provider – has struck an settlement that might see its expertise arm managing Thames Water‘s 16 million prospects.

The cope with Kraken would supply Covalis Capital, the infrastructure investor spearheading the consortium, with vital expertise experience because it seeks to handle one of many UK’s most advanced utilities – and one with a long-standing repute for poor customer support.

Earlier studies stated that Covalis would inject about £1bn into Thames Water, with £4bn extra raised from asset gross sales, refinancing and a inventory market itemizing.

Some business sources have expressed doubts in regards to the feasibility of such a plan.

The emergence of Octopus Power’s involvement within the Thames Water disaster underlines the dimensions of Kraken’s ambitions because it additional extends its attain past the vitality sector.

Earlier this week, TalkTalk turned the primary main broadband supplier to hitch the Kraken platform.

Wholly owned by Octopus Power, Kraken now manages greater than 60 million buyer accounts globally, of which roughly 5 million are water firm prospects.

The consortium comprising Covalis, Suez and Octopus Power was amongst fewer than a handful which tabled indicative provides to assist Thames Water increase roughly £3bn in recent fairness forward of a deadline on Monday.

CK Infrastructure Holding and Fortress Water are additionally understood to have submitted proposals, whereas the personal fairness behemoth KKR stays however didn’t lodge a suggestion, in accordance with insiders.

This week’s deadline was in any case considered arbitrary and meaningless as a result of two different essential determinants of Thames Water’s future have but to change into clear.

One is the end result of a courtroom battle between the water firm’s class A and sophistication B bondholders, each of which have stated they wish to lend an extra £3bn to assist Thames Water survive.

The corporate has backed the category A plan although it can saddle Thames Water with greater curiosity funds at a time when its creaking steadiness sheet has left it on the point of momentary nationalisation.

The second main uncertainty is whether or not Thames Water plans to attraction in opposition to an Ofwat ruling that it will probably improve buyer payments by 35% over the following five-year regulatory interval, somewhat than the 53% it had requested.

Thames Water should determine inside days whether or not to formally attraction to the Competitors and Markets Authority.

Potential fairness traders regard each these occasions as materials to their funding case, with a most well-liked bidder not anticipated to be chosen by the corporate and its advisers at Rothschild till April.

Thames Water was plunged deeper into disaster final 12 months when its current shareholders – comprising a mix of sovereign wealth funds and pension funds – declared the corporate “uninvestible” and reneged on a dedication to offer billions of kilos in new funding.

The federal government has stated it doesn’t regard a particular administration regime (SAR) as a fascinating consequence, though an adversarial consequence from the bondholders’ authorized battle or incapacity to safe extra fairness might render the corporate bancrupt.

Laden with £19bn of debt, Thames Water has already warned that it’s going to run out of cash subsequent month.

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The one different main instance of a SAR course of was that involving Bulb Power, which collapsed in 2021.

Its 1.5 million-strong buyer base was purchased by Octopus Power, with their accounts transferred onto Kraken inside six months.

Kraken, which works with UK water corporations together with Severn Trent and Portsmouth Water, says that it reduces water leakages, and reduces prices for each corporations and prospects.

Octopus Power declined to touch upon Tuesday.