The Australian investment bank Macquarie, which has been criticised for its role in the privatisation of England’s water industry, is understood be among lenders to Thames Water’s troubled parent company.
The former Thames Water shareholder could, along with other lenders, play an important role in determining the fate of Britain’s biggest water company, after its parent company Kemble Water Finance defaulted on its debt.
Kemble said on Friday it had requested that its lenders and bondholders take no creditor action, but the development raised the prospect that the utility could face a significant restructure or even ultimately collapse.
Macquarie’s fresh involvement, first reported by the Times, is likely to spark further controversy, after the Australian group came under fire for loading Thames Water with debt and inadequate investment while receiving big dividends during its part-ownership between 2006 and 2017.
Macquarie has defended its stewardship of the utility, arguing that it invested more than £11bn in Thames Water’s network during the period, the highest per customer level of all water companies in England and Wales.
It emerged last week that the group of lenders to Kemble also include the Dutch bank ING, Allied Irish Banks (AIB) and the Chinese state-owned Bank of China and Industrial and Commercial Bank of China (ICBC).
Kemble has a £190m loan that is due to be repaid at the end of this month, but the banks are expected to agree an extension. Late last month Thames Water’s shareholders refused to stump up £500m needed by the end of March, some of which was earmarked to pay the Kemble loan.
Macquarie is thought to have invested £130m in Kemble’s debt in 2018 and 2020, equivalent to about 9% of the company’s debt instruments. This is not part of the £190m due later this month.
A spokesperson for Macquarie said: “We manage debt investments on behalf of long-term institutional investors in a range of infrastructure companies, providing long-term financing for essential infrastructure. Macquarie has not had any control or influence over Thames Water’s operating company since 2017.”
Macquarie sold its remaining stake in Thames Water seven years ago. The utility’s debt jumped from £3.4bn to £10.8bn during the Macquarie consortium-led ownership.
The Australian group is known for buying public infrastructure. It can then charge fees, and receive dividends for its part-ownership, as well as enjoy any increase in the asset price. Estimates have put dividends paid for Thames Water during the Australian bank’s 11-year stewardship at £2.7bn.
Days after Macquarie’s sale of its stake was announced in March 2017, Thames Water was hit with a then record fine of £20.3m linked to huge leaks of untreated sewage for offences in 2013 and 2014.
