National Grid PLC (LSE:NG.) has tested the market’s appetite post the election call with a £7 billion equity raise as part of a five-year £60 billion infrastructure investment programme and debt restructuring.
The issue is being priced at 645p, a near 40% discount to last night’s close suggesting it must have been a struggle to persuade investors to stump up the cash, even though it is fully underwritten.
Grid is also to sell the UK’s LNG gateway at Grain as part of the fundraising plan alongside National Grid Renewables, its US onshore renewables business.
Most of the money has been earmarked for the electricity infrastructure upgrade but £750 million will also pay for a bond approaching maturity.
John Pettigrew, chairman, described the spending programme as "unprecedented", adding it is double the investment of the past five years and would deliver asset growth of around 10%, and 6-8% underlying earnings growth.
“Our new five-year investment plan will deliver long-term value and returns for our shareholders, support over 60,000 more jobs, and accelerate the decarbonisation of the energy system for the digital, electrified economies of the future.”
Terms of the rights issue are 7 new shares for each 24 existing at 645p each.
In the year to end March 2024, Grid's profits tumbled by 15% to £3 billion reflecting one-off charges, reduced incentive payments in UK Electricity Distribution and lower interconnector revenues.
The full-year dividend rises by 6% to 58.52p.
Shares fell 9% to 1,030p.