Elliott has built up a significant stake in SSE and is now one of the company’s top five shareholders.
An active investor chasing SSE broke cover today to blast the energy giant’s management and increase pressure on the company to spin-off its renewables business.
Elliott Advisors today published a letter to SSE Chairman Sir John Manzoni calling for the company to sell or sell at least part of its renewables business, strengthen its board and formulate more ambitious plans for SSE’s future. Called for the appointment of a new strategy committee. ,
This is Elliot’s first public defense after months of in-camera talks between the American activist and the SSE’s management. Elliott has built up a significant stake in SSE and is now one of the top five shareholders of the company. Elliott is privately lobbying for SSE to split itself in two by spinning off its rapidly growing renewables business and leaving the legacy network infrastructure business as the core.
Elliott breaks cover after SSE’s suggestions are rejected. SSE announced a new strategy last month that aims to make it the largest manufacturer of offshore wind turbines in the world. It plans to invest £12.5 billion in Renewables over the next five years, funded by the sale of a partial stake in its networks business and a cut in its dividend. The stock closed down 4% on the day of the announcement.
In his letter, Elliott said these plans “lack ambition” and “disappointed” investors and analysts. The activist questioned the “adequacy of corporate governance of SSE” and “validity” of the strategy review which led to the investment plan of SSE.
Elliott’s senior portfolio managers Nabil Bhanji and Jeff Rosenbaum said rivals such as Eni and Iberdrola had already shunned the renewable spin-out route, leaving SSE to suffer from “a significant multiple discount to its renewable peers”. He also decimated the company’s “deep, persistent share-price underperformance.”
Elliott wants the SSE to reconsider the possibility of spinning off or selling off up to 49% of its renewables business, a move it believes will accelerate its growth thanks to cheaper capital. The activist also wants SSE to set up a strategy committee at the board level to address the “significant lack of renewable expertise on board” and “to reassure investors that SSE’s strategy will not be limited to coercive initiatives”. Appoint two new independent directors. Announced on November 17.”
Bhanji and Rosenbaum wrote in the letter, “We believe that – with the right steps – there is a clear path for the company to unlock 5 billion pounds of untapped value and establish its leadership position as the UK’s renewable champion.” Is.”
SSE shares fell 3p or 0.2% to 1627p. Despite the volatility, the stock remains largely flat throughout the year.
SSE has been contacted for comment.