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Thames Water has announced that US private equity firm KKR will not proceed with a planned deal to inject billions of pounds of equity into the utility, throwing the future of Britain’s largest water utility into doubt.

Thames Water in late March selected KKR as its preferred partner for an equity recapitalisation deal, under which the US firm would take over the near-insolvent utility and rescue it from the brink of nationalisation.

However, on Tuesday Thames Water said that “KKR has indicated that it will not be in a position to proceed, and its preferred partner status has now lapsed”.

Thames Water has also been discussing a backup recapitalisation plan with its senior lenders. The utility said on Tuesday that it “intends to progress discussions” on this plan with water regulator Ofwat and “other stakeholders”.

This is a developing story