National Grid (LON:NG.) , the international energy group, this morning launched a fully underwritten 2 for 5 rights issue to raise approximately £3.2bn in a share issue priced at 335p. The group said it was raising the new money to fund an ambitious investment programme in the UK, which is forecast to reach £22bn over the next five years. The news came as the group announced a 12% rise in full year pre-tax profits of £1.97bn and further improvements in its reliability and performance both at home and in the US. Shares in National Grid fell by 6.4% to 580p in early trading.

Today’s rights issues has been priced at 335p, representing a 43.7% discount to the closing middle market price per share yesterday, adjusted for a recommended final dividend for 2009/10 of 24.84p. Apart from ploughing cash into its network over the coming years, National Grid said the cash call would help to maintain its single A credit ratings and strengthen the its long-term competitive position.

Steve Holliday, the group’s chief executive, said: “We are confident about the requirement for a step-up in UK investment. We have sized this rights issue at £3.2bn to ensure we will have the financial flexibility to meet our investment needs over the coming years, whilst maintaining our current single A credit ratings.”

National Grid said it had put in a “strong performance” in the year to March 31, with earnings per share up 14% at 57.4p. It pointed out that it had continued to see improvements in customer satisfaction across all of its businesses and was confident of delivering another year of growth.

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