South West Water owner launches £490m rights issue
South West Water owner Pennon Group is to raise £490m as part of its investment plans for the next period after accepting Ofwat’s final determinations.
Investment in the five years to 2030 will be £3.2bn, a “significant uplift” on the £1.9bn spent in the previous period.
Pennon said the fully underwritten rights issue “brings with it clarity and visibility on the overall financing package required to deliver our capital investment plan out to March 2030”.
Water companies across the country have been under pressure for a perception that they have underinvested and underperformed while overpaying dividends.
Pennon Group’s chief executive Susan Davy said: “With these record levels of investment, we will be transforming what we do, fixing storm overflows, building new reservoirs and creating natural habitats for wildlife.
“This is so much more than just about water. It’s about much needed regional investment, creating jobs and building homes. At the same time, we will be supporting customers when they need it most, keeping bill increases low, with innovative tariffs and our £200m support package. We’re doing this.”
Pennon owns South West Water (SWW) and Sutton and East Surrey Water. It expects its gearing in the water business to be in the top half of its long-term policy of 55%-65% and said it is targeting retaining a strong investment grade credit rating of Baa1.
