German utility RWE is reported to be set to spin off its UK water utility Thames Water to reduce its exposure and free up capital.
According to a report in the German newspaper Berliner Zeitung, RWE will establish Thames Water as a free standing entity, re-establish it on the stock market, then sell up to 30% of its shares.
The decision comes as Thames struggles with efficiency and pricing problems in its supply of water to customers in London. The UK water utility experienced almost a 5% drop in its operating profit for the first half of the year.
RWE originally acquired Thames in a surprise move five years ago for $8.8 billion in an attempt to provide a cross-sector offering, however the venture has proven to be too labor and cost intensive.
A re-flotation is expected to value Thames around $18 billion, while a 30% share sell-off would inject approximately $5 billion into RWE’s cash reserves.
Responding to the speculation a RWE spokesperson would not confirm the story, instead saying that RWE continually reviews is business.