National Grid drops after utility unveils largest U.K. rights issue since 2009 By Investing.com

Investing.com — National Grid PLC (LON:) shares shed more than a tenth of their value on Thursday after the British utility announced a new U.K. rights issue worth around 6.8 billion pounds as part of a bid to raise funds for a 60-billion pound energy network investment.

A total of 1.09 billion new shares will be issued at a price of 645 pence per share on the basis of seven new shares for every 24 existing shares, National Grid said in a statement.

It is the largest rights issue in the U.K. since 2009, and the biggest in Europe since 2021. National Grid previously unveiled a rights issue in 2010, Reuters reported, citing a company spokesperson.

The move was announced a day after U.K. Prime Minister Rishi Sunak called a July 4 national election, although executives at National Grid told reporters they do see any “material impact” from a possible change in government, according to Reuters.

Proceeds from the rights issue will mostly be used to fund a “higher-growth investment phase,” the company said, adding that it gives the it the “appropriate financial flexibility” in a planned 5-year push to overhaul its energy network.

“[W]e are confident that we can deliver this step-up in new infrastructure that will provide greater levels of energy security and enable diversification of energy sources to help decarbonise the economies we serve,” National Grid said.

Analysts at RBC Capital Markets argued that investors would likely be “surprised” by both the size and the timing of the fundraising drive. However, they predicted that any initial negative reaction to the news “should remove an overhang” on the stock going forward.

Elsewhere, National Grid, which runs energy systems in the U.K. as well as electricity and gas divisions in New York and Massachusetts, reported a 15% drop in full-year pretax operating profit to 3.05 billion pounds.

Reuters contributed to this report.