ABU DHABI: Abu Dhabi’s Investment Authority (ADIA), one of the largest shareholders in Thames Water, has recently taken the significant step of writing off its approximate 9.9 per cent stake in the beleaguered British utility.
The decision, reported by the Financial Times, underscores the mounting challenges that Thames Water faces, which include substantial debts, regulatory scrutiny, and operational inefficiencies.
Thames Water, which supplies water services to around 16 million customers in and around London, is embroiled in a crisis attributed to persistent sewage dumping, deteriorating infrastructure, and overwhelming financial liabilities.
The gravity of these issues is exemplified by the agency’s decision to write down the value of its stake from £263 million ($344.21 million) to a mere £1 at the conclusion of last year.
Furthermore, ADIA has undertaken a complete write-down of a £31 million loan extended to one of Thames’ holding companies, illustrating the severity of its financial predicament.
The accounts for ADIA’s Luxembourg-registered unit reveal that the firm attributed the write-down to a challenging regulatory environment and subpar operational performance, reflecting broader fears regarding the utility’s sustainability.
Credit downgrading
Notably, the financial troubles at Thames Water have prompted credit rating agencies such as S&P and Moody’s to downgrade the company’s ratings, warning that it is quickly approaching a crisis point that could lead to default.
As the situation intensifies, anticipation builds around British Finance Minister Rachel Reeves’ upcoming budget announcement set for October 30.
Business groups within the UK hope that the minister will foster an encouraging economic climate to instill confidence among investors—confidence that could prove crucial if Thames Water is to navigate its current difficulties.
Should no viable rescue plan materialise, both the UK government and the regulator Ofwat may have no choice but to place Thames Water into a special administration regime (SAR), signaling an urgent need for intervention in the face of financial turmoil.
