The owner of South West Water is planning to raise £490m by issuing new equity shares through a rights issue. Pennon said investors would be able to acquire 13 new shares, at a cost of 264p each, for every 20 they already own.
The move is part of a comprehensive financing package aimed at boosting investment over the next five years, according to the company. The cash will be spent on upgrading the water firm's infrastructure and maintaining debt levels, it said.
Pennon Group also owns Bristol Water, Bournemouth Water and Sutton and East Surrey Water (SES Water).
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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.”
The news comes as households in England and Wales are facing an average £123 or 26% increase to their yearly water bill from April 1. Pennon said this week it had accepted regulator Ofwat’s final determination of what it may charge to customers.
From April, South West Water bills will rise by 32%, while Bournemouth Water customers will also see a 32% increase. Despite this, Pennon is raising its dividend in line with inflation from £129.3m for the year to March 31, 2024. The inflation measure chosen was at 3.5% in the year to December.
Mike Keil, Consumer Council for Water chief executive, said: “These rises are the largest we’ve seen since privatisation and will heap considerable pressure on millions of customers who are already having to make difficult choices.
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“Customers want to see investment in improving services and cleaning up our rivers but that can’t come at an unbearable cost to struggling households.
“Around 2.5 million households are already in debt to their water company and there is a danger that number will grow unless some companies show more ambition around financial support.”
In November, Pennon reported a significant increase in losses following the financial fallout from a parasite outbreak that caused diarrhoea. The company revealed that its underlying pre-tax profit had plummeted from a £19.1m profit in the first half of last year to an £18.6m loss.
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