Oct 25 (Reuters) - British water retailer Castle Water

is looking to acquire a controlling stake in troubled utility

Thames Water, the Financial Times reported on Friday, citing

people familiar with the matter.

Thames Water, Britain's biggest water company, has been

teetering on the brink of collapse since its investors called

the company "uninvestible" in March, blaming the regulator for

not allowing it to increase water bills sufficiently.

Castle Water recently signed a non-disclosure agreement to

infuse equity into Thames Water, FT said, adding that Castle

Water aimed to publicly list Thames Water shares in two to three

years.

The FT said that the exact size of the stake has not been

disclosed.

Thames Water declined to comment. Castle Water did not

immediately respond to a request for comment.

Thames Water, which has warned it could run out of funds in

the coming months, has been in crunch talks with creditors to

secure funding while it seeks the billions of pounds it needs to

survive.

A group of Thames Water creditors had proposed an

alternative liquidity package of up to 3 billion pounds ($3.89

billion) to give the British utility more time to seek a

restructuring of its debt, Reuters reported on Thursday, citing

sources.

(Reporting by Pretish M J in Bengaluru; Editing by Abinaya

Vijayaraghavan)