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Pennon Group PLC on Wednesday said it has accepted Ofwat’s final determination for South West Water and Sutton & East Surrey water units, launching a nearly £500 million equity raise to support the investment the five-year plan requires. The water utility will ‘not be seeking a reference to the Competition & Markets Authority’, it said, referring to the UK competition regulator. ‘The final determinations support a significant uplift in investment over the K8 period to 2030,’ it said. Capital expenditure is to increase to a record £3.2 billion from an expected £1.9 billion for K7, the 2020-2025 period. ‘The investment will be across a range of transformational projects that are focused on areas like tackling the use of storm overflows, bolstering water resources through a new reservoir in the South West, and expanding our programme of nature recovery,’ Pennon said. Pennon said it is launching a £490 million rights issue to aid its ‘balance sheet resilience’. The funds will go towards ‘increased investment in the water businesses’. It proposed a rights issue of 185.9 million new shares at 264p each, on the basis of 13 new shares for every 20 existing shares. Pennon shares were down 3.3% to 498.40 pence early Wednesday, having started down 8%. The wider FTSE 250 index was marginally higher. Pennon noted the rights price represents a 35% discount to the ex-rights price, adjusted for payment of the upcoming interim dividend for 2024 of 14.69p. The dividend will not be payable on the new shares. The rights issue is fully underwritten by Barclays Bank PLC and Morgan Stanley & Co International PLC, who are acting as joint global co-ordinators and bookrunners for share offer. Pennon also said it will revise its dividend policy. The total dividend amount of £129.3 million for the year which ended last March will be ‘rebased on a dividend per share basis’. The rebased payout will grow by the CPIH rate of inflation in the UK from the current financial year, which ends on March 31, to financial 2030. CPIH is the consumer prices index including owner occupiers’ housing costs. ‘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,’ Chief Executive Officer Susan Davy said. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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