(Alliance News) - Pennon Group PLC on Wednesday said it has raised GBP180 million through a fundraise, in connection with its newly announced takeover of Sutton & East Surrey Water PLC.

Pennon, an Exeter-based water utility company, on Wednesday acquired Sumisho Osaka Gas Water UK Ltd and certain ancillary businesses from Sumitomo Corp and Osaka Gas for GBP89 million. Sumisho Osaka is the holding company of Sutton & East Surrey Water, or SES Water.

Pennon said it expects the transaction, which has an enterprise value of GBP380 million, to be earnings accretive from the first year of full ownership and "generate attractive returns".

"SES Water is a fantastic fit for Pennon as we further expand our presence in water supply across Southern England, building on our successful similar acquisitions of Bournemouth Water and Bristol Water alongside the adoption of water supply in the Isles of Scilly," said Chief Executive Susan Davy.

She continued: "As part of the Pennon group, we will enhance SES Water's financial resilience and better position the business to serve its customers and all stakeholders, as has proven to be the case with...Bournemouth Water and Bristol Water."

In connection with the acquisition, Pennon announced its intention to launch an equity capital raise of up to GBP180 million. The fundraise is meant to ensure that the enlarged company's pro forma leverage and capital structure remains consistent with its 55% to 65% water business gearing range.

The fundraise includes a placing of new shares to existing and new institutional investors, along with a retail offer.

Later on Wednesday, Pennon said it had raised GBP180 million. The raise comprises 24.7 million new shares in total, representing 9.4% of the company's issued share capital.

Through the placing, Pennon raised GBP173 million through issue of 23.7 million shares. It raised a further GBP7 million through a retail offer of 925,000 shares and GBP150,000 through a subscription of 20,537 shares.

The shares were priced at 730 pence each. The offer price represents a discount of approximately 2.6% to the closing share price of 750p on Tuesday.

Shares in Pennon closed up 0.8% to 755.50p each in London on Wednesday.

By Emma Curzon and Sophie Rose, Alliance News reporter and Alliance News senior reporter

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