TOP NEWS: National Grid sets GBP7 billion fund raise to power growth

(Alliance News) - National Grid PLC on Thursday launched a GBP7.0 billion rights issue to support ...

Alliance News 23 May, 2024 | 8:34AM
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(Alliance News) - National Grid PLC on Thursday launched a GBP7.0 billion rights issue to support plans for GBP60 billion of investment in UK and US energy infrastructure.

The London-based multinational electricity and gas utility said the investment from financial 2025 to 2029 will be nearly double that of the previous five-year period and will deliver a "significant step-change" in critical energy infrastructure in the UK and US.

Nearly 80% of the capital investment will go into Electricity Networks, with the group mix moving towards 80% electricity and 20% gas by 2029, the company stated.

Chief Executive John Pettigrew called the plan a "defining moment" for the company, "cementing our position as a leader in the energy transition in the UK and US northeast".

National Grid operates electricity and gas distribution networks the US states of New York and Massachusetts.

National Grid said the fully underwritten right issue would be priced at 645 pence per share and will be offer to existing shareholders on the basis of 7 new shares for every 24 already held shares.

Shares in National Grid opened were down 8.8% at 1,028.00p each in London on Thursday morning.

To further help fund the investment, National Grid intends to sell Grain LNG, its UK liquefied natural gas business, and National Grid Renewables, its US onshore renewable energy business.

National Grid also plans "senior debt and future hybrid issuance to maintain balance sheet strength and investment flexibility".

"The board unanimously believes this comprehensive financing plan will allow the group to fund a significant increase in capital investment, maintain its strong investment grade credit rating, deliver for customers, and continue to achieve attractive shareholders returns," it said in a statement.

Alongside this, National Grid unveiled a new five-year financial framework through to financial 2029.

The company plans to deliver group asset compound annual growth of around 10%, 6% to 8% underlying compound annual earnings per share growth from a financial 2025 baseline, and continue a progressive dividend policy.

National Grid said it would maintain the total level of dividend following the rights issue and aim to continue to grow the payout in line with the UK consumer prices index including owner occupiers' housing costs from 2024's rebased level.

Pettigrew said: "Our investment will unlock significant economic growth and, by the end of the decade, National Grid is expected to support over 60,000 more jobs, while also decarbonising our energy systems, bolstering security of supply, and reducing consumer bills in the long term. Our strong track record of infrastructure delivery, positive engagement with our regulators and wider stakeholders, alongside clarity on the scale and profile of our capital investment positions National Grid to take advantage of the significant growth opportunities we see ahead."

Pettigrew said the readiness to take this step "is underscored by another year of strong financial and operational performance."

National Grid on Thursday reported pretax profit fell 15% to GBP3.05 billion in the financial year that ended March 31 from GBP3.59 billion the year before. Operating profit fell 8.1% to GBP4.48 billion from GBP4.88 billion.

This was principally driven by non-cash exceptional charges in the financial year versus gains on disposals in the prior year, partly offset by favourable timing and commodity swings and higher underlying performance versus the prior year.

EPS fell 19% to 60.0p from 74.2p, while the dividend was increased by 5.6% to 58.52p from 55.44p.

Gross revenue was GBP19.85 billion, down 8.4% from GBP21.66 billion, and other operating income dropped to just GBP12 million from GBP989 million, but operating costs were reduced by 13% to GBP15.39 billion from GBP17.77 billion.

Capital investment totalled GBP8.2 billion for continuing operations, up 8% at actual exchange rates.

By Jeremy Cutler, Alliance News reporter

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
National Grid PLC 905.00 GBX 0.44

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