Thames Water’s value is said to have plummeted over the past year after the supplier’s second-largest investor wrote down the value of its stake in the company.
Private pension fund the University Superannuation Scheme reported its 20% stake in Kemble Water, Thames’ ultimate parent, fell from £956 million in 2022 to £364 million last year.
This implies that Thames Water - a supplier to around 15 million people in and around London - fell in value from £5 billion to £1.9 billion over the year.
Thames Water did indeed face a tough year, as increasing costs of servicing its roughly £18 billion debt pile led to fears of the company’s imminent collapse last June.
Some £750 million in emergency funding was made available by shareholders in July to shore up Thames Water’s balance sheet until 2025, though this was short of the £1 billion originally sought.
The University Superannuation Scheme blamed previous poor ownership as among reasons for Thames’ struggles, with former controlling firm Macquarie having presided over increasing debt levels as billions were paid out in dividends in the 11 years to 2017.
“The challenges facing Thames Water are the manifestation of historic under-investment over multiple decades and, more recently, the significant financial impact of soaring energy prices and other inflationary cost pressures,” the University Superannuation Scheme said.
“However, we have given our backing to Thames Water’s latest business plan. As a long-term investor, we can provide patient capital and be an active, responsible steward of the company.”
Payments of some £1.4 billion of Thames Water’s debt are due in the coming years, including £190 million this April.
Of the £750 million granted to Thames Water by shareholders in July, £500 million constitute a loan incurring interest at 8%, meanwhile.
“While the value we place on our Thames investment may go up or down as part of our regular revaluations, we continue to view this as a long-term investment, in line with the long-term needs of the scheme,” the University Superannuation Scheme added.
The pension fund also said it had not “received a shareholder dividend or payments of interest on any shareholder loans” since first investing in 2017.