Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

National Grid’s £7 Billion Fundraising Sparks Market Turmoil

by May 24, 2024
May 24, 2024
National Grid’s £7 Billion Fundraising Sparks Market Turmoil

More than £6 billion was erased from the London stock market’s energy and water sectors after National Grid revealed plans for a major fundraising effort and fears that an upcoming election might delay energy policy decisions.

The FTSE 100 company announced a near-£7 billion rights issue, marking the largest fundraising by a European non-bank entity in 15 years. Proceeds from the £6.8 billion, fully underwritten rights issue will support a £60 billion investment programme over the next five years, almost double the previous period’s expenditure. Over half of this investment will enhance the UK’s electricity distribution and transmission infrastructure, with the remainder allocated to network improvements in New York and New England.

The new shares will be priced at 645p each, reflecting a discount of nearly 35 per cent to Thursday’s closing price. National Grid anticipates this investment will expand its asset base at an average compound annual growth rate of 10 per cent through 2029, and boost earnings by 6-8 per cent annually from 2025.

Following the announcement, National Grid shares plummeted by 122.5p, or 10.9 per cent, to £10.05, while other energy firms, including Centrica and SSE, also saw significant declines. Deepa Venkateswaran, an analyst at Bernstein, attributed the sell-off to a combination of National Grid’s fundraising and potential policy delays due to the forthcoming general election.

The rights issue was unveiled shortly after Prime Minister Rishi Sunak called for an election, raising the possibility of a Labour government assuming power in July.

Water companies were hit harder, with Pennon and Severn Trent shares dropping by 7.1 per cent and 5 per cent, respectively. Analysts at Citi suggest these declines are linked to political risks, such as potential dividend restrictions under a Labour government.

John Pettigrew, National Grid’s CEO, asserted that the political parties are aligned on the necessity of infrastructure for the energy transition, minimising the impact of a potential government change on the company’s plans.

Additionally, National Grid intends to streamline its operations by selling its liquefied natural gas terminal in Kent and its US renewables business. A dividend of 58.52p per share will be adjusted to reflect the rights issue and will increase in line with CPIH from next year.

Despite the larger-than-expected rights issue, Pettigrew reported unanimous shareholder support prior to the announcement. He also indicated that the investment would not significantly raise customers’ bills. “This investment will marginally increase network costs but will facilitate lower-cost renewable energy connections, reducing exposure to volatile global gas prices,” Pettigrew explained, noting the impact of recent gas price surges following the Ukraine conflict.

Based on the current price cap, the typical household energy bill of approximately £1,800 annually includes £22 for upgrading the electricity transmission network, with costs distributed over 40 to 60 years.

Read more:
National Grid’s £7 Billion Fundraising Sparks Market Turmoil

0
FacebookTwitterGoogle +Pinterest
previous post
DOJ’s Office of Inspector General takes heat for allegedly ‘targeting political opponents’
next post
The Ethics of Video Redaction: Balancing Privacy and Accountability

You may also like

City regulators crack down on bankers using private...

October 11, 2022

The “King” of Plastics – PEEK (Polyetheretherketone)

April 11, 2025

Millions face £100 penalty as midnight self-assessment deadline...

January 31, 2025

What to Do If You Were Injured as...

March 29, 2025

CBI warns Rishi Sunak against ‘doom loop’ of...

October 26, 2022

Rishi Sunak announces controversial delays to UK’s net...

September 20, 2023

UK SMEs must strengthen cybersecurity as geopolitical threats...

June 27, 2025

Bank of England warns of growing financial risks...

December 2, 2024

What Growing Charities Get Wrong About Donor Data

June 17, 2025

Piers Morgan being lined up for Celebrity Apprentice...

January 20, 2025

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • National Wealth Fund commits £200m to UK battery storage push

      August 28, 2025
    • XRP price prediction hits new highs, GMO Miner helps you earn $6,800 a day

      August 28, 2025
    • West End retailers lose £310m from VAT-free shopping ban in first half of year

      August 28, 2025
    • Dollar slips as Trump moves to sack Fed governor Lisa Cook in unprecedented clash over central bank independence

      August 28, 2025
    • CDC Director Susan Monarez refuses to be fired as other officials call it quits

      August 28, 2025
    • Bill Gates met with Trump to talk ‘importance of US global health programs and health research’: spox

      August 28, 2025

    Categories

    • Business (8,901)
    • Investing (2,246)
    • Politics (16,503)
    • Stocks (3,228)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved