Affinity Water has been put on the market for £2bn after a strategic review from shareholders Morgan Stanley and the Prudential.
The water supplier, which serves over 3m people across north London, the home counties and Kent, supplies over 900m litres a day.
A sale is expected to be the most likely outcome of the strategic review, the Sunday Times reported.
Affinity Water is owned by a consortium of investors led by Infracapital Partners and North Haven Infrastructure Partners (formerly Morgan Stanley Infrastructure Partners).
Morgan Stanley has a 40 per cent stake in Affinity and has recently sold off infrastructure assets including Spanish gas distributor Red de Gas.
Affinity Water’s profit before tax fell to £46m from £60m in 2015, while revenue rose to £303m from £296m in the same period, according to its financial results for the year ended 31 March 2016.
Affinity Water, Morgan Stanley and the Prudential could not be reached for comment.