Veolia already uses a meaningful amount of hybrid/deeply subordinated securities: €3.496bn at 2023-01-01, up from €2.461bn at 2022-01-01, helped by Suez hybrid contribution. Relative to total equity of €14.867bn, hybrids represent about 23.5%; relative to equity attributable to owners, about 28.5%. So the company is already near a 25% hybrid weighting within its equity-like capital base.

A higher reliance would be risky. The balance sheet expanded sharply after Suez, with total assets rising to €73.3bn and noncurrent financial liabilities excluding concessions increasing to €19.7bn. Net finance costs also rose materially from €343m to €633m, while rates and credit spreads increased in 2022: 5Y swaps averaged 1.726% versus negative levels in 2020–2021, and non-financial IG funding spreads also widened. This makes incremental hybrid issuance more expensive and could pressure coverage and future refinancing flexibility.

However, a zero allocation is also not optimal because hybrids provide equity credit and rating support without immediate common-share dilution, which is useful for a capital-intensive utility/environmental services group with large infrastructure assets, concessions, and acquisition integration needs. Veolia’s profitability and cash generation improved in 2022, with operating cash flow of €4.15bn and profit attributable to owners of €716m, supporting some hybrid capacity.

Given the existing hybrid share near one-quarter of equity, the capital-intensive profile, but also the higher-rate environment and increased leverage after Suez, the appropriate reliance is moderate rather than aggressive. The closest option is 25%.

<answer>25%</answer>