KKR & Co. withdrew its bid to invest £4 billion ($5.4 billion) in Thames Water when the US infrastructure giant realized there was little upside to a deal, according to people familiar with the deliberations.

The water company said the decision not to proceed with the equity raise created uncertainty around its plan to stay afloat, raising the prospect of nationalization.

Thames Water's senior creditors said there was a "short and closing window" for a market-led rescue of the water company after U.S. private equity firm KKR pulled out of a multi-billion pound funding plan on Tuesday.