Global investment firm KKR (KKR) is reportedly looking to pump £4 billion ($5 billion) into Thames Water, the UK’s biggest water supplier, to acquire a majority stake in the company. The utility is drowning in nearly £20 billion of debt, raising fears about its future prospects. With this proposal, KKR aims to bring fresh capital and management expertise to turn things around. Over the past year, KKR stock has gained over 49%.
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Why Thames Water Needs Urgent Support
Thames Water has been struggling with operational failures for years now. In an attempt to stay afloat, it recently secured a £3 billion emergency debt package. This short-term relief was meant to help the company manage rising costs and maintain essential services.
However, experts warn that loans alone won’t solve its deeper issues. A large equity injection, like KKR’s proposed £4 billion, could help the company to regain financial stability.
A Race to Secure Investment in Thames Water
Thames Water’s crisis has attracted multiple bidders, creating a competitive race for control. Alongside KKR, Hong Kong-based CK Infrastructure and UK firms like Castle Water are also considering stakes.
Rothschild & Co. is managing the sale process, with final offers expected later this year. KKR’s strong track record in infrastructure investment could give it an edge in securing the deal.
KKR Expands Its Infrastructure Investments
With this Thames Water deal, KKR is taking another big step in strengthening its infrastructure. Recently, KKR boosted its stake in Eni’s biofuel unit, Enilive, to 30% with a €587.5 million deal.
Further, in 2023, its Highways Infrastructure Trust (HIT) bought four road projects from Macquarie India for ₹3,000 crore, adding key toll roads in Gujarat and Andhra Pradesh. Around the same time, it won a ₹4,181 crore bid for a 316 km highway project in Madhya Pradesh under India’s Toll-Operate-Transfer model.
KKR’s track record shows it knows how to turn struggling assets around, and Thames Water could be its next big project.
Is KKR a Good Stock to Buy?
Turning to Wall Street, KKR stock has a Strong Buy consensus rating based on 11 Buys and three Holds assigned in the last three months. At $174.23, the average KKR price target implies a 25.83% upside potential. Shares of the company have gained 17.3% over the past six months.
