Pennon faces balance sheet pressure ahead of September strategy update

What Brokers Say Utilities Written by: Ian Lyall 12:00 Tue 25 Aug 2026 --> Edited by: Ian Lyall Disclaimer No investment advice About this content Editorial Standards & Policies Share article About this content × About Ian Lyall Ian Lyall, a seasoned journalist and editor, brings over three decades of experience to his role as Managing Editor at Proactive. Overseeing Proactive's editorial and broadcast operations across six offices on three continents, Ian is responsible for quality control, editorial policy, and content production. He directs the creation of 50,000 pieces of real-time news, feature articles, and filmed interviews annually. Prior to Proactive, Ian helped lead the business output at the Daily... Read more About the publisher Proactive financial news and online broadcast teams provide fast, accessible, informative and actionable business and finance news content to a global investment audience. All our content is produced independently by our experienced and qualified teams of news journalists. Proactive news team spans the world’s key finance and investing hubs with bureaus and studios in London, New York, Toronto, Vancouver, Sydney and Perth. We are experts in medium and small-cap markets, we also keep our community up to date with blue-chip companies, commodities and broader investment stories. This is content that excites and engages motivated private investors. The team delivers news and unique insights across the market including but not confined to: biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto and emerging digital and EV technologies. Use of technology Proactive has always been a forward looking and enthusiastic technology adopter. Our human content creators are equipped with many decades of valuable expertise and experience. The team also has access to and use technologies to assist and enhance workflows. Proactive will on occasion use automation and software tools, including generative AI. Nevertheless, all content published by Proactive is edited and authored by humans, in line with best practice in regard to content production and search engine optimisation. Pennon Group PLC ( LSE:PNN OTC:PEGRY ) View Price & Profile Pennon faces balance sheet pressure ahead of September strategy update Published: 12:00 25 Aug 2026 BST Pennon Group PLC (LSE:PNN, OTC:PEGRY) , the owner of South West Water, faces a crunch balance sheet decision at its strategic update in September, according to two City brokers. RBC Capital Markets cut its price target on Pennon to 575p from 650p, though it kept an "outperform" rating, citing a lower assumed return on regulatory equity. UBS maintained its "buy" rating with a price target of 620 pence, noting the shares closed at 462 pence on 21 August. Pennon's new chief executive, Keith Haslett, appointed in April, is conducting an operational review after the company recorded one of the weakest Environment Agency pollution ratings in the water sector over the past 15 years. Both banks pointed to the strategic update as the key catalyst for the shares. They agree that Pennon carries more debt than its water sector peers, with RBC putting net debt to regulatory capital value at 63.3%, rising to 67.1% by 2030. RBC estimates that raising around £200 million would rebase gearing to roughly 64% by 2030, in line with United Utilities and Severn Trent. UBS goes further, forecasting gearing could reach 70% by 2030 without action, and says it would not rule out "capital measures", which could include an equity raise, asset sales or a dividend cut. The brokers highlighted the possible sale of Pennon Power, the group's solar and battery storage arm, as a way to ease balance sheet strain. Continue reading