US hedge fund Elliott tries to break up SSE

By Mark McSherry

US activist hedge fund Elliott Advisors is pushing for a breakup of Perth-based energy and networks giant SSE after building up a small stake in the company, Bloomberg reported, citing people “with knowledge of the matter.”

The activist hedge fund is said to see value in separating or selling SSE’s renewable portfolio from its regulated electricity businesses.

Some analysts have already argued that SSE could unlock value by breaking up.

Bloomberg reported that Elliott has been “meeting privately with representatives from SSE” as well as some of its major shareholders.

SSE shares rose 2% on Tuesday, giving it a current stock market value of £17.3 billion.

The only company run from Scotland with a bigger market capitalisation than SSE is Edinburgh investment giant Baillie Gifford’s flagship fund Scottish Mortgage with £19.5 billion.

NatWest-RBS has been run from London for several years.

SSE employs 10,000 in the UK and Ireland.

SSE is working with its corporate brokers Credit Suisse and Morgan Stanley on dealing with Elliott.

Bernstein analyst Deepa Venkateswaran said in a note in July that SSE was “significantly undervalued when we apply transaction multiples” and argued that the firm might be a target for an “integrated energy major” that wanted move faster into cleaner energy technologies.

Investec analyst Martin Young has said SSE still “has fingers in many pies.”

“At some stage, given the magnitude of investment that will be needed in the energy transition, they are going to have to make some decisions” on how to focus the business, he said.