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A water firm co-founded by the treasurer of the Conservative get together is in discussions to take a stake in Thames Water, which is trying to elevate billions of kilos to keep away from a possible renationalisation.
Fort Water — which acquired Thames Water’s company clients from the utility in 2017 — is taking a look at contributing new fairness to bolster the steadiness sheet of the UK’s largest water utility, in line with 4 individuals acquainted with the matter. Fort Water is trying to take a controlling stake, one of many individuals has mentioned.
Graham Edwards, who has donated tens of millions of kilos to the Conservative get together and serves as its treasurer, is one in every of Fort Water’s co-founders, administrators and shareholders.
Fort Water just lately signed a non-disclosure settlement to probably present new fairness funding for Thames Water, the individuals acquainted with the state of affairs mentioned, permitting the corporate to conduct due diligence on the utility’s personal monetary data.
Below Fort Water’s plans, shares in Thames Water could be publicly listed in two to a few years to “carry the transparency that inventory market-listed water firms ship”, mentioned one particular person near the discussions. They added that Fort Water had funding in place for the fairness elevate and that it could herald extra administration capabilities for a turnaround of the troubled utility, which serves about 16mn clients in and round London.
The dimensions of the stake underneath dialogue is unclear however could be anticipated to present Fort Water management over the utility.
Thames Water is trying to elevate as a lot as £3bn from new buyers on this fairness elevate, overseen by funding financial institution Rothschild, after the pension and sovereign wealth funds that personal the corporate declared it “uninvestable” and walked away from offering additional funding in March.
The monopoly can be in search of a rise to its payments of 53 per cent in actual phrases by 2030 to allow it to lift the £3bn of funding it wants simply to maintain operating and ship infrastructure enhancements.
Edwards co-founded Fort Water with its chief government John Reynolds in 2014 to capitalise on the deregulation of the enterprise water market, the place firms apart from the utilities had been allowed to deal with buyer complaints, payments, meter readings and a few operational points.
Fort Water’s most up-to-date accounts state that the corporate is in the end managed by a belief of which Edwards is a beneficiary. Accounts for WPGSS Restricted, which is listed on Corporations Home as proudly owning greater than 50 per cent of Fort Water’s shares, additionally state that Edwards is its “final controlling get together” via a British Virgin Islands holding firm.
Edwards can be the chief chair of TT Group, one of many UK’s largest privately held property firms, and has shut ties to the true property group’s house owners, the billionaire Pears household.
Reynolds, Fort Water’s chief government, is a former funding banker and a former member of the Water Trade Fee for Scotland. Reynolds additionally beforehand served because the chair of the Church of England Moral Funding Advisory Group and is the writer of the e-book Ethics in Funding Banking.
Individually to the fairness elevate, Thames Water on Friday mentioned it was in search of to borrow £3bn from collectors to permit it to maintain working till October subsequent yr.
The proposals have been tentatively agreed with the collectors concerned, who’re the most important holders of a few of Thames Water’s most senior debt and embody hedge fund Elliott.
They’d cost curiosity of 9.75 per cent a yr on the funds, far above market charges for many loans, and would even be paid charges.
However Thames Water additionally wants a decisive majority of its different lenders to agree to increase present debt by two years and to consent to the brand new mortgage preparations.
Fort Water, Thames Water, the senior bondholders and the Conservative get together declined to remark. Edwards didn’t instantly reply to a request in search of remark.
Extra reporting by Ivan Levingston in London
