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Highlights
- Pennon to raise £490 million through a fully underwritten rights issue.
- 185.9 million new shares issued at 264p per share (a 35.2% discount to the theoretical ex-rights price).
- Funds will support a £3.2 billion investment program through March 2030.
- Maintaining sustainable gearing policy of 55-65% for regulated water businesses.
Pennon Group plc (LSE:PNN) has unveiled plans to raise £490 million through a fully underwritten rights issue as part of its broader strategy to invest £3.2 billion in critical infrastructure by March 2030. The initiative aligns with the company’s acceptance of Ofwat’s Final Determinations, ensuring financial stability while maintaining a strong investment-grade credit rating.
Rationale for the Capital Raise
The rights issue is a key component of Pennon’s financial strategy for the K8 regulatory period (2025-2030). The investment program aims to drive at least 34% growth in regulatory capital value (RCV) while keeping leverage within sustainable limits. Pennon is committed to maintaining gearing levels between 55-65% for its regulated water businesses, ensuring financial resilience while delivering essential infrastructure improvements.
Details of the Rights Issue
Pennon’s rights issue will involve the issuance of 185.9 million new shares at 264p per share, representing a 35.2% discount to the theoretical ex-rights price. Shareholders will be offered 13 new shares for every 20 existing shares. However, the newly issued shares will not be eligible for the 2024 Interim Dividend of 14.69p per share.
Dividend Policy Update
Pennon has also revised its dividend policy in light of the capital raise. The total dividend for FY 2024, amounting to £129.3 million, will be adjusted to reflect the rights issue. From FY 2025 onwards, dividend growth will be linked to CPIH inflation, ensuring predictable returns for shareholders over the investment period
