Would you buy shares in Thames Water?

Good afternoon. This is your midday market update from City AM.

Would you buy shares in Thames Water?

A consortium of investors plotting to keep the beleaguered utility out of state control say it’s their ultimate ambition to float the business on the London Stock Exchange.

Before that dream can come close to becoming a reality, there is the small matter of Thames Water running out of money before the end of the year.

The company has taken on eye-watering sums of debt over the past decade – doubling its total borrowings to nearly £20bn. Some of that has been to fund big infrastructure projects like the £5bn Thames Tideway Tunnel – but the firm also paid out billions in dividends to shares over its meandering ownership history post-privatisation.

London & Valley Water, a group of investors and creditors to the firm, hope to keep the liquidity taps flowing with a recapitalisation plan that will help fund the roughly £10bn in costs the company faces over the next few years.

Today the company sought to sweeten the deal, and fend off the Burnham nationalisation threat, by proposing to appoint a former Labour cabinet member as the utility’s new chair.

Lord John Hutton was MP for Barrow and Furness from 1992 to 2010, during which time he ran the Department for Work and Pensions under Blair and was a business minister under Brown.

They hope Hutton, who has been in the Lords since 2010, will be enough to ensure Burnham that the water business will put customer needs over those of investors.

But Burnham appears to have other plans. The Guardian reported overnight that Britain’s newest PM is pushing for more “radical” options for the future of Thames Water, amid his wider drive to end the “neoliberalism” he appears viscerally opposed to.

Burnham has reportedly instructed Whitehall policy officials to explore options that were not previously considered feasible, even if they would incur legal challenge or extra cost to the taxpayer.

But as former BoE chief economist Andy Haldane pointed out today, government finances are already on “borrowed time” and a profligate budget next week risks a “Liz Truss-plus” moment. Full nationalisation may simply prove unaffordable.

Stuck in a 12th-century lease trap? Discover how medieval rules still dictate modern offices and how to break free today!

Regardless of whether the consortium’s plans pay off, Thames Water is still bearing fruit – of sorts.

Flows of untreated sewage overflows into the tributaries of the Thames, combined with this summer’s heatwaves, have proved fertile conditions for salad and plum tomatoes to sprout up in droves along the whiffy banks.

Jim Waterson, a former City AM reporter-turned-London Centric substacker, went along to harvest the tomatoes. He collected enough to make ten jars of chutney.

Would you like to advertise with us or become a sponsor? Please reach out to: [email protected]