Activist investor steps up call to split up Scottish energy giant SSE and 'unlock £5 billion': reaction

Activist investor Elliott Investment Management has renewed its push to get Scottish energy giant SSE to split off its renewables business.

In a lengthy and detailed letter to the FTSE-100 group’s chairman Sir John Manzoni, Elliott calls on SSE “to act expeditiously to restore investor confidence”. It argues that by splitting off the renewables business into a separate unit, some £5 billion of value would be generated.

The Perth-headquartered energy group frustrated Elliott last month when it opted not to split up the business, arguing in a strategy update that such a move would lead to £95 million a year of lost value.

Hide Ad
Hide Ad

In its letter Elliott notes: “The strategic initiatives announced on November 17 represent a first step in the evolution of SSE’s structure towards an eventual separation.

SSE is one the world's largest investors in onshore and offshore wind energy.SSE is one the world's largest investors in onshore and offshore wind energy.
SSE is one the world's largest investors in onshore and offshore wind energy.

“However, your announcement lacked ambition and disappointed your shareholders as well as many analysts and media commentators who were expecting more.

“We believe that - with the right steps - there is a clear path for the company to unlock £5bn of untapped value and establish its leadership position as the UK’s renewables champion.”

In response, SSE chief executive Alistair Phillips-Davies said: “Having conducted a rigorous process involving constructive engagement with shareholders, and consideration of independent advice, we were delighted to launch our net zero acceleration programme on November 17 which represents the optimal pathway to accelerate clean growth, lead the energy transition and create value for all stakeholders.

“Separation risks valuable growth options across the clean energy value chain, would jeopardise our ability to finance and deliver the major infrastructure the UK needs to create jobs and achieve net zero, and would lose shared skills that benefit the group.

“Separation does not support the financing of our core growth businesses and would rule out adjacent growth options, as well as reducing the resilience of the business model - it is not the right outcome to maximise value for shareholders or our other stakeholders.”

Last month, SSE outlined plans to invest £12.5bn over the next five years as it looks to accelerate its net zero plans. The firm said the move makes it the biggest constructor of offshore wind in the world.

Read More
Scottish energy giant SSE to pump £12.5 billion into net zero plans: profits jum...

A message from the Editor:

Thank you for reading this article. We’re more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers. If you haven’t already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription:

Related topics:



Want to join the conversation? Please or to comment on this article.