One of UK’s largest listed water company United Utilities is making a submission to the regulator to increase its investment capacity in a bid to fuel expansion plans.
The FTSE 100 firm is calling for Ofwat to lift its AMP8 budget, the five year investment period running until 2030, to £11.5bn from £9bn, to match growth in the North West.
The demand for more water is coming from a boom in AI zones, which will require swathes of water for cooling as well as the 66,000 new homes being built requiring 34 wastewater sites to be approved. The company expects these plans to generate 4,000 new jobs.
To help pay for the extra £2.5bn, United Utilities is asking investors to buy £800m in new shares in a method that will keep its debt levels stable.
Chief executive, Louise Beardmore said: “With our upgraded financial framework, sector-leading financing performance and strong delivery track record, we are confident in our ability to generate attractive and sustainable returns for shareholders while delivering for our customers, communities and the environment.”
Profit doubles
Elsewhere, the water giant posted a 22 per cent bump to revenue for the year to the end of March to £2.6bn, alongside a more than doubling of pre-tax profit to £779m.
The company hiked its dividend 3.5 per cent to 35.78p.
United Utilities shares rose 10.9 per cent to 1,455p in early trading on Thursday. The stock is up by more than 20 per cent since the start of the year.
AJ Bell investment director Russ Mould said: “Plans for a massive flood of investment at water utility company United Utilities has created an unusual level of excitement for a part of the stock market historically seen as pretty boring.
“In more recent times the water sector’s name has been mud with investors, regulators, the public and politicians thanks to issues around pollution and financial mismanagement across the broader sector.
“The plan to support areas like data centres, clean energy and new homes is being taken as a game changer by investors for now, although delivering on this big programme of spending and remaining on time and on budget is the big challenge for the company.”