Shares in United Utilities Group PLC (LSE:UU.) surged over 11% to a new all-time high after announcing plans to raise £800 million as well as increasing and widening its range of investments, moving into building homes, data centres and clean energy in the North West.
Alongside full-year results, the FTSE 100 water company said its AMP8 capital programme will rise to about £11.5 billion, up from around £9 billion, with an additional £2.5 billion aimed at supporting housing, industry and environmental projects.
Chief executive Louise Beardmore said the investment plan marked "the most significant transformation of our region's water and wastewater infrastructure in more than a century".
The group has submitted £1.4 billion of projects to the regulator Ofwat, with further funding expected through later reviews.
UU now expects its asset base to grow at around 10% a year to 2030, up from previous guidance of 7%, and is targeting regulatory returns of 10-11%.
To fund the expansion, the company is raising £800 million through a share placing from institutional investors and an offer to small investors via RetailBook.
Full-year results showed underlying revenue rose 20% to £2.6 billion, while operating profit increased 35% to £1.1 billion.
Capital investment for the year reached £1.5 billion, with operational improvements including a reduction in pollution incidents and sewer flooding.
Beardmore said: "One year into our five‑year AMP8 programme, we are delivering at pace and at scale - strengthening the resilience and quality of our services, protecting and enhancing the environment, and supporting sustainable economic growth and thousands of new jobs across the North West."
She said the group is "making real progress" on issues such as reducing storm overflow spills and sewer flooding.
The new plans for additional investment in the region, including a move into homes, data centres and clean energy, is a "focused, disciplined and well-funded plan [that] will help us accelerate delivery of the transformation in infrastructure and services that the North West expects and deserves".
Shares jumped 11.5% to 1,463p in early trading on Thursday, having already gained 8.4% since the start of the year.
Broker Jefferies said the upgraded financial framework, with a target of 10-11% regulatory returns, was around 100 basis points above prior guidance.
"At first glance, we see the higher growth, coming with a robust balance sheet, as positive for UU and the broader water sector."
Analysts at AJ Bell added that the plans "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."
** UPDATE: Adds share price, broker comments **