Pennon seeks £550m from shareholders for £1bn water investment

• Pennon will offer seven new shares for every 15 held, at 250p each, in a fully underwritten £550m rights issue.
• The raise is part of a wider funding plan for about £1bn more investment, taking planned spending across Pennon’s regulated water businesses to roughly £3.6bn by March 2030.
• Pennon is cutting its dividend by about 30% per share, after adjusting for the new shares.
• The plan follows a £7.8m fine for South West Water over environmental offences in Devon and Cornwall.

Pennon’s investment figure is for its regulated water businesses collectively, not South West Water alone. The company owns several water businesses, including South West Water, Bristol Water and SES Water. Its revised plan adds about £1bn to the capital investment it had planned for the five-year regulatory period ending in March 2030, known as AMP8.¹

The rights issue is one part of the funding package, not the whole £1bn. Pennon says it will also use borrowing, efficiencies and cash generated by the business, and plans to sell Pennon Power. The share offer is fully underwritten by Barclays and Morgan Stanley, which have agreed to back it; that does not tell us how many shareholders will subscribe themselves.²

The offer is due to open on 12 October, with different shareholder groups facing deadlines on 22 and 26 October. Pennon expects to announce the results by 27 October. Those dates are indicative and could change.²

The extra investment is intended to improve asset health, reliability, environmental performance and customer service, Pennon says. The announcement sets out broad aims, rather than a detailed breakdown of the work or a guarantee of particular improvements.

Pennon also plans to reduce its total dividend to about £125m for the 2026–27 financial year, from £138m in 2025–26. After allowing for the new shares, the company estimates the dividend per share will fall by about 30%, to around 18p.¹

The announcement follows South West Water’s £7,867,733 fine on 29 September. The Environment Agency said the company had pleaded guilty to 18 environmental offences relating to incidents in Devon and Cornwall between 2015 and 2021.³

Regulatory approval for some additional spending remains unsettled. Ofwat provisionally allowed £230m of Pennon’s request through its cost-change process; Pennon said that was 76% of the amount it sought and that a final decision was expected by 15 December. The company’s investment plan is not itself that regulatory decision.¹

Pennon chief executive Keith Haslett told The Guardian the additional investment would not be funded through further customer-bill increases. That is the company’s assurance, not a decision on future bills by the regulator.⁴

Footnotes

1. Pennon Group, strategic update and dividend announcement, 7 October 2026 ↩ ↩² ↩³

2. Pennon Group, rights issue terms and indicative timetable, 7 October 2026 ↩ ↩²

3. Environment Agency, South West Water fined £7.8m, 29 September 2026 ↩

4. The Guardian, South West Water owner taps investors to fund infrastructure, 7 October 2026 ↩