Only in Britain could a company with guaranteed customers and zero competition still collapse under its own incompetence. I run a private credit company (FundOnion), where I’ve seen pretty much everything under the sun. But this - this one tops them all.

If you pitched that on Dragons’ Den, Deborah Meaden’s stare alone would sink the deal before the others got a word in. Yet somehow, Thames Water still keeps the tap running for 16 million people.

It’s quite laughable… until you remember it’s your drinking water and you’re also footing the bill. And that’s the real punchline: the Thames scenario is less a utility story and more a case study in short-term greed meeting long-term collapse.

Lessons that trickle down to the rest of us:

When Thames Water was privatised in 1989, it was handed over squeaky clean: debt-free, monopoly in hand, future wide open. What could possibly go wrong?

Plenty, apparently.

By the time Macquarie got involved (2006 - 2017), the playbook was textbook private equity: double the debt to £10bn, pay yourself handsomely, ignore the pipes. Shareholders got dividends. Customers got sewage. Infrastructure got left to rot.

Decades of dividend-grabbing and duct-taped infrastructure have led us here:

Debt-free at privatisation, £22.8bn under today. In a single generation Thames managed to turn a debt-free monopoly into a corporate write-off. This is drinking water - not crypto, not a speculative biotech, not a risky punt. 

If we can’t keep a utility alive without choking it with debt, what chance does anything else have?

And the splashback? It hits everyone.

A) Customers first

Now staring down bills of £639 a year for the privilege of brown rivers and pipes that leak like sieves. Pay more, get less - and if the whole thing finally collapses, the taxpayer gets to pick up the mop. You couldn’t script it worse if you tried

B) Investors aren’t laughing either

Once upon a time UK water was a pension-fund darling: dull, dependable, monopoly cash flow. Today it’s toxic waste. Political risk through the roof, regulators circling and with KKR sprinting from the £4bn “rescue”, the message is clear: this isn’t a defensive asset, it’s a career-ending headline.

C) As for the government…

Thames is the smoking gun no one wanted. Decades of debt-fuelled privatisation have punched holes straight through the system, and now Whitehall’s stuck with the panic button: Special Administration. It’s not a fix. It's proof the company has already failed.

Reputation is capital. Lose it, and the money disappears as quickly.

Ask Nestlé. In the 70s and 80s it pushed infant formula in countries without safe drinking water. The backlash was brutal: boycotts across Europe, a stain that never really washed off. Sales crept back, but trust didn’t - and in business, trust is the collateral you can’t refinance.

Thames is stumbling into the same trap. Sewage in rivers, pipes collapsing, executives still trousering bonuses. It all tells a simple story: this is a company bankrupt of character before cash. And unlike debt, you can’t paper over that with a loan.

Not tutting-at-the-telly levels of annoyed. Full-on anger that bills keep climbing while the infrastructure rots beneath our feet.

Support for nationalisation is ballooning, with one line doing the rounds on Reddit threads: “let investors lose their money”.

Hard to argue. For decades, profits were privatised, risks were socialised, and now the public is expected to foot the mop-up bill.

For decades, the watchdogs were more lapdog than guard dog. Ofwat kept bills low and investors sweet, but let debt spiral and infrastructure rot. 

When fines finally arrived, they were late, token, and dwarfed by the dividends already siphoned out. The Cunliffe review didn’t mince words: “chaotic, incoherent, expensive”. Not exactly what you want from the people guarding your drinking water.

That vacuum left investors to run their own risk tests. KKR didn’t walk from a £4bn rescue because of the spreadsheet, they walked because of the stink. No fund wants its logo splashed across headlines linking their capital to sewage spills and executive bonuses.

And so Thames sits in the worst of both worlds: regulators too weak to act and investors unwilling to commit. Debt can be managed, but once trust is lost, it doesn’t return.

Every time Thames makes the news, the same old pantomime starts: one side shouting nationalise everything, the other insisting private is always better. I’d say both are wrong.

Public ownership gives you slow, bloated bureaucracy. Private ownership gives you faster, leaner… short-term looting. Thames managed to prove both sides right at the same time - an achievement, if nothing else.

The reality is, private capital can work. It can fund growth, ease the burden on taxpayers and even keep rivers clean. But only if incentives are aligned and someone’s actually checking the books. In Thames’ case, the incentives were “pay dividends, ignore pipes”, and the referees were busy polishing their clipboards. Result: £22.8bn of debt and sewage in the Thames.

And spare me the excuses. This isn’t about Net Zero, woke regulators or any other convenient scapegoat. The crisis is clear-cut: decades of handing out dividends while the debt pile grew like Japanese knotweed. That’s not misfortune.

Regulators were buried in paperwork while the rivers turned brown - more focused on reports and targets than stopping the rot. The result: Caps, subsidies and a lot of finger-pointing. 

Investors, meanwhile, deal in risk and return, not sewage or customer bills. But when the headlines start to poison both, the calculation changes quickly. KKR’s exit from the £4bn rescue was as much about reputation as it was about numbers.

Change the names - regulator, HMRC, Series A lead - and the story stays the same. Thames is just the headline case of what happens when you let the leaks run.

First, assume costs are only ever going one way: up. 

It won’t be the stuff you’ve planned for, it’ll be the curveballs: a regulator obsessing over the wrong metrics, a tax bill you didn’t see coming, supply chains throwing a tantrum. Build a 10-15% buffer into your unit economics for the nonsense. If your model only works in perfect conditions, it’s just a delusion.

Second, plan for the worst case scenarios.

A neat 5% sales slide won’t sink you. A tax hike, a compliance ambush or a supplier going AWOL might. Write down the one hit that would floor you and sketch out your Plan B (and C and D) now.

Third, diversify your lifelines. 

Thames has leaned on plenty of lenders over the years, but when it came to the latest £4bn rescue, they put all their hopes on one “white knight” - KKR. And when the cavalry rode off, the plan collapsed. It’s the same risk for founders who rely too heavily on one client, one supplier or one investor. That’s where platforms like FundOnion come in (shameless plug). Instead of betting survival on one lender, you get transparent, instant access to a whole network of 40+. That way you can shop around rather than pinning 40% of your survival on a single handshake. Diversify. Don’t drown.

Fourth, don’t wait for oversight to smack you in the face. 

Thames only moved when regulators forced it, and by then the bill was astronomical. Don’t treat governance as a trend or a TED talk. Do the boring stuff early - transparency, ESG, basic standards - because self-regulation earns you credibility with both investors and customers, long before anyone official notices.

And finally, treat reputation like cash flow. 

Thames completely lost trust. That’s when investors bolted. Ask yourself: what crisis could we survive without losing customers, staff or credibility? Build that reputational buffer now. Because when trust evaporates, so does money.

Seriously. Map out your debt, equity and investor obligations in black and white. Then put it to the test: what happens if rates climb another notch or revenue dips harder than you planned? 

Ask yourself if your investors are genuinely in it for the long run, or just waiting for the first decent exit.

Make it practical:

A) List everything: Write down every loan, repayment date, interest rate, and equity obligation in a simple spreadsheet

B) Run scenarios: Model what happens if interest rates rise 1-2% or revenue drops 10-20%

C) Check liquidity: track how much cash runway you have under each scenario

D) Assess investors: Note who’s committed long-term vs. who’s only here for a quick exit

And while you’re at it, bin the notion of the bailout hero. Thames bet everything on KKR and got ghosted. 

I’ve started running barefoot. Not in a primal, “find yourself in nature” kind of way, more because I read it might stop me from wrecking my knees. There’s also some science around circulation: running barefoot supposedly stimulates the veins in your feet that connect back to the brain. 

In theory, better blood flow, clearer head.
In practice, it just makes me look slightly unhinged jogging past dog walkers with no shoes on, praying I don’t step on glass. 

And no, I’m not pulling an Adam Neumann. I’m investing in myself - trying to get a bit fitter, a bit sharper and maybe not funding my physio’s next holiday. I’m always keen to hear about other (quirky) health hacks, feel free to send them my way.

Debt discipline beats financial engineering. Every time. Back the right investors, because the wrong ones will sell you out faster than Thames turns rivers brown. 

And remember: regulation and reputation aren’t footnotes. When trust goes, so do the keys to your office.

If you’d like someone to spot the sewage before it hits the fan, drop me a line.

Till next time,

James