(Bloomberg) -- The enormous capital raise by the UK’s National Grid Plc is Europe’s largest rights offering outside the banking sector for 15 years, according to its chief executive officer. And it’s in stark contrast to the funding approach taken by Britain’s struggling water companies.

Both industries need huge spending to fix and maintain existing infrastructure, while building more to meet future demand. Both are regulated in similar ways and must balance demands from investors for competitive returns with keeping customer bills in check. They usually raise debt and equity to fund projects. 

Yet companies such as Thames Water Ltd. have come unstuck by amassing debt without the equity needed to keep the balance sheet stable. Now, Thames is struggling to get the investment it needs to keep operating.

National Grid on Thursday announced plans to raise £6.8 billion ($8.6 billion) of capital to underpin a £60 billion spending program. The utility will continue to issue senior debt and use hybrid debt to “maintain balance-sheet strength,” it said. Gearing, a key metric of a firm’s stability, will drop to the low 60% range.

Read More: UK’s National Grid Plans Huge Capital Raise in Net Zero Push

That compares with gearing of 79.5% for Thames, one of the highest levels in the sector. It has £16 billion of debt and has lost the backing of shareholders. The company is currently running down its cash pile as it strives to avoid being put into special administration, a form of temporary nationalization.

National Grid is “a clear contrast to the water sector, which arguably faces more urgent funding needs but where investors are more reluctant to inject equity” and there’s less scope for disposals, said Paul Vickars, a senior credit analyst at Bloomberg Intelligence. That leaves credit quality “looking increasingly stretched.”

Water regulator Ofwat has tightened the screws on shareholder payouts, while returns for electricity networks have also been trimmed in recent years to ensure consumers get value for money.

Grid investors have remained on board. Yet Thames shareholders, critical of years of poor management and regulatory conditions they deem too harsh, have shown they’re prepared to walk away.

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