Elliott Management, the New York-based hedge fund renowned for its aggressive investment tactics, is set to play a pivotal role in the future of Thames Water after acquiring the utility company’s debt at significantly reduced prices, according to a report by the Daily Telegraph.
Elliott, which manages around $65bm in assets has become one of the largest lenders to the UK’s biggest water supplier amid its recent financial uncertainty by buying up hundreds of millions of pounds worth of Thames Water bonds at discounted rates. Now ranking among the top creditors in a pool of about 90 financial institutions, Elliott holds a position estimated at nearly £1bn, placing the hedge fund at the centre of an ongoing rescue effort aimed at restructuring Thames Water’s finances.
Other major hedge funds, including Apollo Management, DE Shaw, and Anchorage Capital, have also built up significant positions in Thames Water’s debt. These firms, along with more mainstream asset managers such as Blackrock and Invesco, are part of a steering committee tasked with spearheading a radical restructuring plan, which will involve writing off a significant portion of Thames Water’s debt while seeking new shareholders to inject fresh equity into the company.
The restructuring aims to stabilise the company and prevent emergency nationalisation.
Together, these creditors face a potential “haircut” of 5% to 10%, with some sources suggesting losses could reach up to 20%. Meanwhile, junior creditors holding “class B” debt are expected to suffer more severe losses, potentially as high as 40%, with some at risk of being wiped out entirely.
Elliott’s involvement echoes its long-standing reputation as a powerful activist investor. The firm famously battled the Argentine government for 15 years to collect on debt, going as far as seizing a naval ship to force payment.
