The group, which serves millions of customers across the Midlands and Mid Wales, said the proceeds will be used for a number of environmental projects that have been endorsed by sector watchdog Ofwat.
Among these, Severn Trent is planning to decarbonise the water supply in the Midlands, improve flood resilience across the region and provide customers with smart meters.
It will place shares with investors and offer shares to retail investors. Certain directors and executives will take part in the offer.
Earlier this week, the firm said it plans to invest £565 million to support the UK's green economic bounceback, creating 2,500 jobs in the Midlands in the process.
It comes as Severn Trent saw profit slip 17 per cent in 2020 due to a fall in water use due to the pandemic.
Profit fell to £471 million, down from £568 million the prior year. It said that the various Covid-19 lockdowns had cost it £50 million, but that it would be able to reclaim these funds later.
It also said that it had been awarded a £79 million bonus by the regulator due to delivering on its customer pledges.
CEO Liv Garfield said: “The last year has thrown up multiple challenges for us but it’s clear everyone at Severn Trent has responded superbly to the new normal we find ourselves in. Our industry-leading customer ODI performance shows just how much we’ve been able to improve our services, often while working in very difficult circumstances.
"At the same time, we’ve increased the support we give to our customers and the communities we serve, from schemes for the most vulnerable to the extra funding we’ve made available to help charities and not-for-profits get through the pandemic.
"We took a very early decision to be at the forefront of efforts to help our region bounce back. That is why it was such good news that we’d been successful with our Green Economic Recovery proposal, meaning we can invest even more in sustainable projects and help create thousands of jobs. Add in our ambitious Kickstart programme, the launch of the Great Big Nature Boost, and our sustainability support for the Birmingham Commonwealth Games and it’s clear, both operationally and environmentally, that it’s been a strong year for Severn Trent.”