SSE rejects Elliott break-up pressure with £12.5 billion renewables plan

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nergy giant SSE has rejected calls from an active investor to split itself in two, instead doubling down on plans to turn it into a major renewable energy player.

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SSE has today pledged to spend £12.5 billion over the next five years towards the transition to renewable energy. The announcement means SSE has more than doubled the amount of capital allocated to renewable energy, with an additional £1 billion now earmarked for each year of the investment programme.

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The push will make SSE the largest manufacturer of offshore wind turbines in the world and increase the amount of renewable energy produced by four gigawatts (GW). SSE will deliver 25% of the UK’s targeted 40GW of offshore wind power by 2030.

The new accelerated net zero scheme is fully funded, appears to have canceled the equity growth, and the SSE has promised to keep paying investors, albeit at a discounted level. The dividend will be rebased from around 66p to 60p, around 60p from 2023. SSE promised to increase payments by at least 5% from 2023 to March 2026.

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The move into renewable energy investment comes at a time when SSE is facing pressure to wind up its renewable energy business. Activist investor Elliott has quietly forked a stake in the business and is said to be pushing for a break-up behind closed doors. Today’s strategy signals a rejection of that pressure.

SSE chairman Sir John Manzoni said the board had “carefully considered a number of strategic options” and “taken independent advice”.

He added: “The Board believes these schemes represent the optimal path for SSE, establishing it as the UK’s clean energy champion.”

Investment plans were announced with half-year results showing adjusted pre-tax gains of 30% to £174 million in the six months to the end of September. Martin Young at Investec said the results were “roughly in-line”.

SSE declared interim dividend of 24.4p to 25.5p.

Shares weakened to 78.5p, 4.6%, up 1580p.

“The earnings update is good and the mid-term plan is positive for us,” wrote analysts at UBS. “Yet the stock has been strong lately and some may still be disappointed that the renewable business hasn’t seen carving out today.”

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