Thames Water, the UK’s largest water company, has received a £5 billion takeover bid from Covalis Capital, with plans to enlist France’s Suez Group to manage a comprehensive restructuring.
The offer comes as the utility faces mounting financial struggles, including a £19 billion debt burden and a pressing need for £3.25 billion to ensure operational continuity and infrastructure improvements by 2030.
Covalis Capital has proposed an upfront injection of £1 billion, with the remaining £4 billion to be raised through the sale of Thames Water’s assets.
The plan may involve breaking up parts of the company, such as its operations in the Thames Valley, followed by a stock market flotation of the restructured business.
The Financial Times reports that the UK government would retain a seat on Thames Water’s board and a “golden share,” granting it special rights to safeguard the interests of the 16 million customers it serves across London and the Thames Valley.
Under the proposed arrangement, Suez Group, which manages water services in France and employs 5,000 staff in the UK, would serve as an operational partner. Suez clarified that it would not acquire any shares but would provide technical and organisational advisory services.
“In exclusive partnership with Covalis, Suez is submitting a non-binding offer to advise and assist Thames Water by leveraging Suez’s expertise in technical advisory and organisational optimisation,” the company said. It emphasised its commitment to supporting Thames Water’s operational recovery and ensuring its long-term sustainability in line with regulatory expectations.
The bid has faced criticism from union leaders. GMB national officer Gary Carter called plans to break up Thames Water a “disaster for consumers and workers.”
“These bids won’t stop leaks or pollution—they’ll only benefit those profiting from breaking up the company. The government must halt this vulture auction and take control of Thames Water in the public interest,” Carter said.
Covalis is not the only contender for Thames Water. Hong Kong-based CK Infrastructure Holdings, the owner of Northumbrian Water, and Castle Water, co-owned by Conservative Party treasurer Graham Edwards, are also reportedly preparing bids.
Final offers are expected by January, pending a decision from Ofwat, the regulator for England and Wales, on the extent to which water companies can increase customer bills.
Thames Water has requested a 53% hike by 2030, though Covalis believes its proposal would succeed with less generous terms. Ofwat’s ruling on water company returns is scheduled for 19 December.
As Thames Water battles to stabilise its operations and finances, the bid from Covalis Capital, with Suez Group’s advisory support, could shape the future of the company and the services it provides to millions of UK residents.
