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)