Thames Water has selected the US private equity group KKR as its preferred bidder to take control of the UK’s largest water utility and aid its battle against renationalisation. KKR, which is already a shareholder in Northumbrian Water, had submitted a preliminary £4bn bid to take a majority stake in Thames Water earlier this year.

Thames Water has picked US private equity giant KKR as its "preferred partner" to buy the troubled water utility firm. The planned investment by KKR would help it deal with its mountain of debt, and Thames is aiming for the transaction to be completed in the second half of this year.

The water utility selected the private equity company as preferred partner to help it deal with its debt pile, but warned that bondholders might have to take losses under the firm’s proposal.