Key backer pulls out of Thames Water deal

The business had been selected as its preferred partner back in March. However, on Tuesday (3 June), Thames said the private equity firm had indicated that "it will not be in a position to proceed, and its preferred partner status has now lapsed".

Thames Water chairman Sir Adrian Montague said: "Whilst today’s news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal.

"The company will therefore progress discussions on the senior creditors’ plan with Ofwat and other stakeholders. The Board would like to thank the senior creditors for their continuing support."

It comes on the same day that the Independent Water Commission published its interim findings for wider-scale reform in the water sector. Off the back of this, commission chair Sir Jon Cunliffe set out five areas where he believes wide-ranging and fundamental change is needed in the water sector.

These are:

• Strategic Direction and Planning
• Legislative Framework
• Regulatory Reform
• Company Structures, Ownership, Governance and Management
• Infrastructure and Asset Health

Sir Jon Cunliffe said: "There is no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector.

"We have heard of deep-rooted, systemic and interlocking failures over the years – failure in Government’s strategy and planning for the future, failure in regulation to protect both the billpayer and the environment, and failure by some water companies and their owners to act in the public, as well as their private, interest.

"My view is that all of these issues need to be tackled to rebuild public trust and make the system fit for the future. We anticipate that this will require new legislation."