Pennon to raise £550 million in rights issue, rebase dividend for water upgrade

British water utility Pennon Group announced on Wednesday that it plans to raise £550 million through a fully underwritten rights issue, while simultaneously reducing its dividend for the 2026/2027 financial year. The dividend will be cut from £138 million in 2025/2026 to approximately £125 million, affecting both interim and final payments.

This reduction is part of a wider plan to make dividend payments more sustainable over the long term. Despite the dividend cut, Pennon expects to grow the dividend per share in line with the Consumer Price Index including housing costs (CPIH) from the reduced level onward. The company expects to invest around £3.6 billion in the regulated water businesses over the AMP8 period, which is £1 billion more than initially planned.

Ofwat has provisionally approved £230 million in growth in regulatory capital value (RCV) for these investments, with a final decision expected by December 15. Pennon anticipates making an additional £170 million in investments through the 2027 and 2028 cost change processes, subject to Ofwat approval. The company aims to achieve total additional RCV growth of over £400 million, which would bring RCV growth to more than 40% across the AMP8 period.