Three things you need to know in the financial markets this morning from investment writer, Tony Cross
Severn Trent, United Utilities and Thames Water
There are notifications from Severn Trent, United Utilities and privately held Thames Water that they have submitted their five year business plans to water regulator Ofwat this morning. These cover the 2020-2025 period and are hugely significant to shareholders. This remains a very tightly regulated market as it’s Ofwat which has the power to dictate the level of dividend that can be paid out. Feedback from Ofwat won’t be seen this year, but a top line view on Severn Trent’s submission is a 5% real cut in bills for customers and a 1% community dividend to support local ventures in the catchment area. Great for recipients, but it’s shareholders who end up footing the bill.
United Utilities
United Utilities is taking an even more aggressive approach to its pricing, promising customers a 10.5% reduction in bills. Again, shareholders will be keen to understand the dividend implications here, but the company notes that this cannot be outlined until the responses from Ofwat are received.
Funding Circle
Moving away from water and after Aston Martin last week, Funding Circle, the specialist SME lender, has announced that it intends to publish a prospectus ahead of an IPO. The company is eyeing a valuation of around £2 billion and puts together an impressive pitch, both in terms of how quickly it is growing and also the impact its operations are having on helping grow SME businesses in the UK.
