Elliott Is Said to Push for Breakup of British Power Firm SSE

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(Bloomberg) — Billionaire Paul Singer’s Elliott Investment Management is pushing for a breakup of SSE Plc after building up a stake in the British power company, people with knowledge of the matter said. 

The activist hedge fund sees value in separating SSE’s renewable portfolio from its regulated electricity businesses, the people said, asking not be identified because the information is private. Elliott has been meeting privately with representatives from SSE, which is based in the central Scottish city of Perth, as well as some of its major shareholders, according to the people. 

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Shares of SSE have risen 36% over the past 12 months, giving it a market value of 17 billion pounds ($23.6 billion). The company has developed clean energy projects across the U.K. and Ireland, with about 4 gigawatts of wind and hydroelectric power assets, according to its website. It aims to triple its renewable power output from 2019 levels by 2030. 

The company also runs a regulated power grid business in the U.K. and owns a number of gas-fired power plants and energy storage operations. It supplies electricity to 3.8 million customers in northern Scotland and central southern England.

Elliott has pursued a similar playbook before with EDP-Energias de Portugal SA, pushing the company to sell a stake in its Iberian electricity distribution business and offload a Brazilian unit to reinvest the proceeds in renewable energy. Shares of EDP’s listed renewables arm have more than tripled over the past four years, and it’s now worth more than its parent company. 

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The SSE investment comes at a time deal activity is picking up in the utilities sector, aided by investor interest into assets offering a steady long-term returns. National Grid Plc is working on the sale of a majority stake in its gas grid business, after agreeing to buy PPL Corp.’s U.K. electricity distribution business for 7.8 billion pounds as part of efforts to prepare for a low-carbon future.

Specialty Pharma

Elliott also recently disclosed a 5% interest in U.K. specialty pharmaceutical firm Clinigen Group Plc. Elliott is in conversations with the company and is seeking ways for Clinigen to unlock value, people with knowledge of the matter said. 

Clinigen has long been seen as a takeover target for buyout firms, but no concrete offers emerged even in the depths of the pandemic-fueled market rout. The company’s stock plunged in June when it gave lower-than-expected earnings guidance.

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Shares of Clinigen have risen 0.7% over the past 12 months, giving the company a market value of 906.6 million pounds. The FTSE AIM All Share Index of companies listed on London’s junior market has risen 34% during the period. 

Clinigen acquires the rights to niche commercial drugs and expands their distribution. It also helps patients get access to treatments that aren’t licensed in their countries. The company has a separate division providing services to drugmakers running clinical trials, helping with areas such as packaging, distribution and medicine sourcing. 

Betaville was first to report Elliott’s holding in SSE. Representatives for Elliott, SSE and Clinigen declined to comment. 

©2021 Bloomberg L.P.

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