Energy giant SSE close to being split up after activist campaign

SSE, Britain’s second-biggest energy provider, is close to being split into two separate blue-chip companies following pressure from a Wall Street activist.

The Daily Telegraph has learnt that SSE, chaired by former civil service head Sir John Manzoni, could announce the plans in the coming weeks at the company’s interim results. Insiders cautioned that the split was yet to be finalised and the board could still decide to sell to one of the businesses to private equity or scrap the plans altogether.

Activist investor Elliott Advisors is understood to have amassed a stake worth more than £500m in SSE, making it a top five shareholder.

The US investor, founded by billionaire Paul Singer, has been in talks with SSE’S board to split the company’s legacy wholesale networks business from its growth renewables operations for more than a year, according to sources close to the situation.

It is understood that other institutional investors are broadly supportive of the plans.

Founded in 1998 following the merger of Scottish Hydro-electric and Southern Electric, SSE sold its retail arm in January 2020 to OVO Energy.

And last month it agreed to sell a 33pc stake in gas network company SGN to a consortium of investors including Ontario Teachers’ Pension Plan.

Currently, SSE uses some of the steady income stream from the networks division to fund growth in its renewables arm. The company is aiming to triple its renewable energy output by 2030. But Elliott is believed to have convinced SSE’S board of the merits of a separate listing that would allow the new entity to raise capital for investors to fund its expansion.

Elliott, known for its outspoken campaigns to pressure boards into a change of strategic direction, previously pursued a similar strategy against the board of Edp-energias de Portugal. The Portuguese company sold a stake in its electricity distribution unit and used the proceeds to invest in renewable energy – with shares having risen sharply since.

Elliott remains locked in a battle with the board of another FTSE 100 firm, Glaxosmithkline. The US hedge firm has questioned whether boss Dame Emma Walmsley is the right person to lead the business after it splits in two.

A spokesman for SSE said: “We do not comment on market speculation. SSE intends to update in November.”