Macquarie ‘very proud’ of Thames Water possession in spite of loading it with debt

The funding financial institution that bought Thames Water in 2017 after loading the corporate with debt has mentioned that it’s “very proud” of its file, even because the water software teeters at the snapping point.

Australia-headquartered Macquarie led a consortium that owned Thames Water from 2006 till 2017. Macquarie has been criticised via some politicians and analysts for its keep watch over of the trade, accusing the financial institution of atmosphere it on the right track for monetary cave in.

Thames Water provides water and sewerage services and products to 16 million shoppers in London and south-east England. However, it has reached the threshold of cave in after money owed rose to close £20bn, and it final month gained court docket acclaim for £3bn in emergency investment.

Macquarie’s critics argue that the funding financial institution set Thames Water at the route to destroy. Debt on the software rose from £3.4bn when Macquarie purchased in to £10.8bn when it bought its final stake in 2017. At the similar time, Macquarie and different traders won dividends price £2.8bn.

Ben Way, the crowd head of Macquarie Asset Management, final month instructed traders on a choice that Thames Water had advanced below its possession.

“We’re actually proud, very proud of our ownership of Thames Water,” Way mentioned. “It was a much better business, imperfect, but much better business after our stewardship, and we can’t talk about what happened subsequently.”

Way, who has labored for Macquarie since 2006, denied any hyperlink between Thames Water’s more moderen monetary struggles and the financial institution’s possession, in step with a transcript hosted via the knowledge corporate AlphaSense. The Financial Times first reported at the feedback.

“So imagine being blamed for a house that you own seven years ago when the roof leaked,” he mentioned. “It is quite strange.”

Despite the £3bn debt package deal, Thames Water nonetheless has to safe longer-term fairness funding in an effort to fund upgrades to sewer and water remedy works after a long time of underinvestment. Thames has selected KKR, a US non-public fairness investor, as its “preferred partner”. The New York-based corporate is anticipated to procure a stake in Thames price £4bn.

Macquarie is now the most important shareholder in Southern Water, some other software below monetary drive. Way mentioned Macquarie had now not confronted a backlash from the federal government over its file on Thames.

“What I would say is that Thames Water is a very good example of the ability to have the courage of your convictions and look beyond the media drama or noise,” Way mentioned. “Because the fact of the matter is, no regulator in the UK in the last 10 years has looked at Macquarie other than as a very positive owner of assets.”