Qatar takes Severn Trent stake as water company commits £12.9bn investment plan

Qatar’s sovereign wealth fund has taken a £500m stake in Severn Trent, with the water company 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” £12.9bn investment program to improve its environmental credentials .

The FTSE 100 company said the program would create up to 7,000 jobs in the Midlands and claimed it would result in a 30% reduction in storm surge disasters and a 16% reduction in leaks.

Under the plan, which covers the regulatory period from April 2025 to March 2030, £5 billion of investment will go towards “improving capacity and service beyond current levels”, Severn Trent said.

New jobs: Severn Trent said the “record” £12.9bn investment program would create up to 7,000 jobs in the Midlands

The majority of the funding will be used to improve the “natural environment”, while a further £700 million will go towards improving water supplies.

A further £400m will be spent to bring the company operationally to zero by the next decade.

To fund these measures, a £1 billion share placement will be carried out, with half coming from the Qatar Investment Authority and the remainder from institutional investors.

A retail placement is also being offered to raise almost £7 million from individuals.

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

The Coventry-headquartered group, which supplies 4.8 million homes and businesses in Wales and the Midlands, plans to submit the plan to water regulator Ofwat on October 2.

Liv Garfield, managing director, said: “By 2030 we will have transformed our network to provide the very best service to our customers.”

“At the heart of these ambitions is a commitment to a sustainable future – from healthier rivers to creating thousands of jobs, fewer leaks and a water supply that can cope with the impacts of climate change and population growth.”

“At the same time, our £550 million affordability program aims to ensure that no customer in our region has to worry about paying their water bill.”

The reputation of British water suppliers has been damaged in recent years by controversy over constant sewage discharges and leaks into rivers and beaches.

According to Surfers Against Sewage, around 390,000 cases were reported in the UK in 2022, using data from the Environment Agency, Natural Resource Wales and the Scottish Environment Protection Agency.

When it published its annual results in May, Severn Trent admitted it should have given “much more attention and quicker action” to tackling sewage problems.

The water industry has come under renewed criticism for racking up huge debts, rewarding shareholders with billions of dollars in dividends and giving executives large compensation packages.

Liv Garfield is one of the industry’s highest-paid personalities, earning £3.2 million in the last financial year, including a bonus of £358,800.

Bosses of numerous other water companies, including Thames Water and Pennon Group decided to forego their bonuses, bringing their total earnings since she was appointed CEO to £25m.

Shares in Severn Trent rose 2.6 per cent, or 59 pence, to £23.24 on Friday morning, despite being down around 13 per cent so far this year.