The owner of South West Water is seeking £550m from shareholders as its boss tries to turn around the struggling business after a parasite scandal.
Pennon Group shares plunged by nearly 19pc on Tuesday after it said it would cut its dividend and ask investors to stump up more cash to fund a £3.6bn investment in its pipes and services.
The supplier was at the centre of a contaminated water outbreak in 2024 that led to a string of customers falling ill in Devon . It was forced to issue a warning to 17,000 households because of the presence of a parasite that can cause diarrhoea.
Keith Haslett, the chief executive at Pennon, said the company would seek to raise £550m by selling new shares to existing investors so it could put in "more investment where our assets need it most".
He said: "It's clear from my comprehensive review that Pennon has real strengths, but there are areas where we need to improve and deliver better outcomes for our customers and communities.
"I have looked hard at how we operate, maintain and invest in our assets and today we are setting out in detail what we are doing."
He added: "I am confident this plan will deliver a better service for customers, improve our environmental performance and generate sustainable, growing value for our shareholders."
Pennon said its investment plan was £1bn more than was required under the terms set out in a review by regulator Ofwat in 2024.
Those requirements were set out weeks after residents in Brixham, Devon, were told to boil their tap water after the discovery of an outbreak of cryptosporidiosis , which left hundreds of people ill.
Pennon also said it would reduce its dividend payments from £138m in its 2026 financial year to around £125m in 2027 as it seeks to put itself on a firmer footing.
It said it would continue to use debt funding and proposed the sale of its renewable energy investment vehicle Pennon Power to cut debt.
The investment plans come as Andy Burnham raises the prospect of "greater public control" of essential services such as utilities.
Mr Burnham faced a backlash from Labour MPs after shelving plans to place struggling Thames Water into emergency administration.
The Government is working on whether there is a viable alternative to putting the utility into a special administration regime, a type of nationalisation, after officials baulked at the cost.
