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.
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.
Martin Stanley, Macquarie Asset Management