Severn Trent to raise £1bn equity to support record £13bn PR24 investment

On Friday, Severn Trent announced plans to raise £1bn of new equity to support record spending: a £13bn totex programme across 2025-30.

Ahead of submitting its business plan to Ofwat today, the company issued the equity placing, with £500m to come from the Qatar Investment Authority and the other half via a retail offering to investors.

Severn Trent’s plan featured £7bn of base expenditure, £0.9bn of modelled enchantment to fund predictable trends such as population growth, and £5bn of enhancement to meet statutory targets by 2030 and accelerate the delivery of post 2030 statutory targets for customer and environmental benefit. 94% of spend will be statutory, the company said. Key issues to be tackled are pollution, storm overflow spills and leakage, (with a plan to meet the government 2050 targets on the latter two five years early).

Bill levels were forecast to rise from £419 at the end of AMP7 to £518 at the end of AMP8. The company will double the number of customers helped with a £550m affordability support package, addressing water poverty by 2030.

Severn Trent said it projected to raise £5.9bn of debt over the course of AMP8, of which £2.1bn will be refinancing and £3.8bn new. Gearing will remain below 70% for the duration of period. The base dividend yield paid from Severn Trent Water to its parent company Severn Trent Plc assumed in the plan is 4% across AMP8, in line with submission guidelines.