Three groups make formal offers for Thames Water

Three groups led by Terra Firma Capital Partners, UBS and Macquarie are understood to have made formal offers in the auction for Thames Water, a UK water company owned by German utility RWE.

Terra Firma Capital Partners, Guy Hands’ private equity firm, and two consortia led by investment bank UBS and Australia’s Macquarie Bank have made formal offers for Thames Water, the UK-based water company owned by German energy group RWE.

Deutsche Bank and Goldman Sachs, the two banks running the auction, were reported by the Financial Times to have received the bids before a noon deadline yesterday.

The UBS consortium includes its infrastructure fund and the Qatar Investment Office among its investors. Terra Firma Capital Partners’ bid was backed by Morgan Stanley, Merrill Lynch and Lehman Brothers.

Macquarie Bank has yet to finalise its investor group, but may have to sell South East Water, a UK water utility business acquired by the £1.5 billion Macquarie European Infrastructure Fund in late 2004, due to competition regulations in the UK.

3i, a global private equity firm, was understood to have partnered with Borealis, a Canadian pension fund, but did not submit a formal offer.

Other firms reported to have shown interest in Thames Water who didn’t make a formal offer and have yet to join one of the consortiums include Alinta, an Australian energy group, Babcock & Brown, a global advisory and investment firm, and Cheung Kong Infrastructure Holdings, a Hong Kong-based infrastructure investor.

Thames Water is expected to fetch up to £7 billion (€?13.2 billion) for RWE, which acquired the business for approximately €7 billion in October 2000. Thames Water is currently carrying out a cost-cutting programme following missed targets and controversy regarding water leakage rates.