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.

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.

Thames Water selected KKR & Co. to enter the so-called Phase 2 diligence stage of its equity process as the preferred partner.