Thames Water suffered a major setback in its fight to avoid nationalisation on Tuesday as it said U.S. private equity firm KKR had pulled out of a multi-billion pound rescue plan.

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.