Hedge fund pressing SSE to split off renewable energy arm
SSE could face pressure to break up its energy business as the activist hedge fund Elliott Advisors pushes for a spin-off of its renewable energy division after building a stake in the company.
The hedge fund has reportedly begun talks with senior SSE executives after investing in the firm over the summer, and has joined industry analysts calling for it to separate or sell its renewables business.
Elliott has not publicly confirmed its position in SSE’s shares and has declined to comment on reports this week. SSE also declined to comment.
The campaign would mark Elliott’s second UK target this year after the $48bn (£35bn) fund took aim at the pharmaceutical group GlaxoSmithKline, calling for its boss, Emma Walmsley, to reapply for her job.
SSE’s chief executive, Alistair Phillips-Davies, and chairman, John Manzoni, completed a big overhaul of the company in early 2020 with the £500m sale of its energy supply business to Ovo Energy to focus on developing renewable energy and operating its regulated electricity networks.
SSE runs power lines and cables across central southern England and the north of Scotland, as well as a growing renewables portfolio of wind farms and hydro power plants.
Phillips-Davies has claimed investing in renewable energy and power network upgrades to cope with a rise in electric heating and car charging is a coherent strategy for Britain’s “net zero carbon” future.
Industry analysts claim the company is undervalued in the market, despite the overhaul, and could reap big financial benefits from splitting renewables and networks.
Deepa Venkateswaran, an analyst at Bernstein, said in July that the company’s renewable energy portfolio was undervalued by the market and it could increase its market value more than 50% by disposing of its networks business.
SSE’s shares have climbed by 14% to £16.59 yesterday since speculation about Elliott’s interest emerged.