Thames Water: Upgrading London’s water and wastewater infrastructure
Thames Water: Upgrading London’s water and wastewater infrastructure


Thames Water: upgrading London’s water and wastewater infrastructure

Over more than a decade, Macquarie and its co-shareholders significantly increased investment levels at Thames Water, the UK’s largest water and wastewater utility, and refocused the business on its core services.

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Sector Infrastructure
Sub-sector Water
Location United Kingdom


Modernise Victorian-era infrastructure.

Rapid industrialisation and population growth during the early 1800s put pressure on the River Thames, with sewage from approximately two million Londoners emptying into the city’s main water source. Following the ‘Great Stink’ of 1858, Londoners invested in the city’s first modern sewerage system and expanded the clean water supply system – installing an extensive network of cast iron mains to connect homes across the city to clean drinking water and sewerage services.

Thames Water was privatised in 1990 after more than a century under public ownership. By this point, the Victorian installations continued to form a core part of London’s water and wastewater network and Thames Water was struggling to keep pace with required investment levels.

The combination of private ownership and a transparent regulatory framework resulted in a considerable increase in investment in the network. However, when Macquarie Asset Management led a consortium of long-term infrastructure investors and pension funds to acquire Thames Water in 2006 it was clear that a material step up in investment was required. 


To prepare Thames Water for the next chapter in its history, Macquarie and its co-shareholders set in motion a programme to significantly increase investment in the network.

This strategy saw an average of more than £1 billion invested each year between 2006 and 2017 to maintain, upgrade and expand the network. With investment levels three times higher than when Thames Water was under public ownership1, almost double than when it was a listed company2 and significantly higher than when it was owned by a multi-utility3, the business was able to begin critical upgrades to improve operational performance.

At the time of Macquarie’s initial investment, Thames Water had also expanded into business lines outside its core focus, including transport maintenance services, real estate and international markets. Macquarie partnered with the utility to divest non-core areas of the business – helping management focus on the provision of efficient water and wastewater services to the people of London and the Thames Valley.


The increased investment levels allowed Thames Water to complete vital capital works needed to improve wastewater management services.

The Victorian mains replacement programme saw some of the network’s oldest and leakiest cast iron mains replaced – reducing leakage rates by approximately 22%4. This initiative, combined with the construction of the UK’s first desalination plant, resulted in a significant increase in security of supply for Thames Water customers5.

The utility invested in its sewage treatment capacity, including the expansion of facilities at Beckton to create one of Europe’s largest sewage treatment works6. The delivery of the Lee Tunnel in 2016 also improved the health of London’s river systems – avoiding more than 16 million tonnes of sewage flowing into the Thames Tideway each year.

Thames Water customers also benefited from some of the lowest water bills in the UK. Despite investment levels per customer being among the highest in the industry, their bills were the third-lowest in England and Wales7. Drinking water quality was also consistently maintained amongst the best in the industry8.

£1 billion

average annual investment over 12 years

22% reduction

in leakage rates4


customer bills in England and Wales7

Water quality

consistently ranked amongst the industry best8

"We feel privileged to have been associated with Thames Water for such a long period of time and are pleased to have significantly increased investment levels and improved operational performance. On ending our period of ownership in 2017, Thames Water was undoubtedly a better, stronger and more customer-focused business than that which we invested in back in 2006."

Martin Stanley, Macquarie Asset Management

All information current as at 31 March 2019, unless otherwise stated.

  1. Based on average annual investment of £323 million in the five years immediately before privatisation 1984 / 85 – 1988 / 89. ‘Our Finances Explained November 2018, Thames Water’.
  2. Based on average annual investment of £580 million between 1989 – 2001. ‘Our Finances Explained November 2018, Thames Water’.
  3. Based on average annual investment of £660 million between 2001 – 2006. ‘Our Finances Explained November 2018, Thames Water’.
  4. Based on a reduction of leakage from 862 megalitres per day in 2005/6 to 677 megalitres per day in 2016/17.
  5. Based on an increase in Security of Supply Index score from 22/100 in 2005/6 to 99/100 in 2016/17.
  6. Based on total wastewater treatment capacity.Institute of civil engineers and Tideway.
  7. Based on average annual customer bill of £374 in 2016/17.
  8. Based on drinking water quality of 99.96% in 2016/17.

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