Qatar takes Severn Trent stake as water group pledges £12.9bn investment plan

The Qatari sovereign wealth fund has taken a £500million stake in Severn Trent, with the water firm hoping to raise more than £1bn to fund a new investment plan. 

Severn Trent, which is responsible for an area covering the Bristol Channel to the Humber, and from mid-Wales to the East Midlands, unveiled a ‘record’ £12.9billion investment programme as it seeks to improve its environmental credentials.

The FTSE 100 business said the scheme would create up to 7,000 jobs across the Midlands, and claimed it would lead to a 30 per cent decline in storm overflow spills and a 16 per cent fall in leakages.

Under the plan, which covers the regulatory period running from April 2025 to March 2030, £5billion of capital expenditure will go on ‘enhancing capacity and service beyond current levels’, Severn Trent said.

New work: Severn Trent said the ‘record’ £12.9billion investment programme would create up to 7,000 jobs across the Midlands

Most of the funds will be focused on upgrading ‘the ‘natural environment,’ while another £700million will go towards boosting water supply levels.

Another £400million will be spent on making the firm operationally net zero by the next decade.

To finance these measures, a £1billion share placing is being undertaken, with half coming from the Qatar Investment Authority and the remainder being raised from institutional investors.

A retail placing is also on offer to raise almost £7million from individuals.  

Households will also have their average annual water bills hiked from £379 to £518, although due to current cost-of-living pressures, Severn Trent has pledged a £550million support package for customers struggling to pay their bills.

The Coventry-headquartered group, which serves 4.8 million homes and companies across Wales and the Midlands, intends to submit the plan to water regulator Ofwat on 2 October.

Liv Garfield, its chief executive, said: ‘By 2030, we will have transformed our network to provide our customers with the very best service.

‘At the heart of this ambition is a commitment to a sustainable future – from healthier rivers to providing thousands of jobs, fewer leaks and a water supply ready for the impacts of climate change and population growth.

‘At the same time, our £550million affordability scheme aims to ensure no customer in our region needs to worry about affording their water bill.’

UK water firms have seen their reputation tarnished in recent years by controversy over constant sewage discharges and leakages into rivers and beaches.

Approximately 390,000 times were reported in Great Britain in 2022, according to Surfers Against Sewage, using data from the Environment Agency, Natural Resource Wales, and the Scottish Environment Protection Agency.

When publishing its annual results in May, Severn Trent admitted that it should have given ‘much more attention and acted faster’ on combatting sewage problems.

The water industry has faced further criticism for accumulating massive debts while rewarding shareholders with billions in dividends and giving executives significant compensation packages.

Liv Garfield is one of the best-paid figures in the sector, having earned £3.2million in the last financial year, including a £358,800 bonus.

Bosses at numerous other water firms, including Thames Water and Pennon Group, chose to forfeit their bonuses, taking her total earnings since becoming CEO to £25million.

Severn Trent shares were 2.6 per cent, or 59p, higher at £23.24 on Friday morning, although they have contracted by around 13 per cent so far this year.

This post first appeared on Dailymail.co.uk