SSE hit back at fresh criticism from activist investor Elliott Management (Elliott) over its corporate governance and renewables plan.
The energy giant has described the latest calls from Elliott to separate its renewables business as a risk that could “jeopardise” its ability to deliver major infrastructure across the UK and reach net zero carbon emissions.
Alistair Phillips-Davies, SSE’s chief executive, said: “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.”
He also suggested the separation undermines the financing of its core business, concluding that is “not the right outcome to maximise value” for shareholders and stakeholders.
The statement follows Elliott writing to SSE chairman Sir John Manzoni on Tuesday morning, accusing SSE of lacking ambition and disappointing shareholders.
The activist investor argued SSE has “failed to put forth a comprehensive vision for how it can remedy its persistent undervaluation, reverse its historical share-price underperformance and adequately fund renewables growth beyond 2026.”
In particular, it slammed SSE’s decision to boost spending by £12.5bn over the next five years, without reforming its renewables arm as a distinct company.
It also criticised the decision to cut dividends by up to 30 per cent by 2023-24 – arguing it would alienate valued shareholders.
The activist group believes a separate renewables business could be worth £21 per share and £5bn in value.
Elliott acquired a stake in the operator in September and remains sceptical of the firm’s ability to fund its growth in the long-term.
It is now pushing SSE to improve its value creation with more ambitious disposal plans of its network business and a partial renewables listing.
It has also called for SSE to enhance its corporate governance with a strategic review committee and greater renewable expertise in the board room.
SSE renewables strategy faces investor push back
SSE’s announced plans last month to strengthen its renewables division with extra spending paid for by dividend cuts and selling a hefty stake in its networks business, met a mixed response from analysts and shareholders, with shares down 4.28 per cent on November 17 following the announcements.
In today’s response, SSE outlined that its plans followed rigorous engagement with its shareholders, describing its current plans as the “optimal pathway” to sustained growth amid the global energy transition.
Commenting on its actions since last month’s announcement, Phillip Davies said: “Since then we’ve continued to have constructive and supportive discussions with our major shareholders and stakeholders about the plan, which was also backed by Moody’s who reaffirmed SSE’s Baa1 rating and upgraded their outlook to stable on the strength of the plan.”
It is now trading at 1,638p on the FTSE 100, up 0.46 per cent at close of play on Tuesday.