(Bloomberg) -- Germany’s RWE AG management hinted the energy company could consider share buybacks to appease investors after a lackluster share price performance, according to a sales trading note from Jefferies Financial Group Inc.
Markus Krebber, chief executive officer at RWE, said the company considers their capital allocation policy twice a year and will consider selling down projects at earlier points in project life cycles to increase capital efficiency, a Jefferies sales trader wrote to clients after a fireside chat with the executive this week.
It’s a “shareholder friendly message on shareholder returns and capital efficiency from a dozen or so meetings in the US,” according to the note, which added it “likely means expectations around a buyback announcement increase into November.”
There’s no such plan for share buyback “at the present time” and the focus remains on implementing its organic investment program, RWE said in a response to Bloombreg News on Friday.
RWE’s share price is down about 19% this year increasing pressure on the company to cave in to activist investors who have been urging the German utility to return cash to shareholders rather than seeking mergers and acquisitions.
RWE has agreed to close its coal-fired power stations by 2030 and has been trying to offload the assets sooner to boost shareholder value. The company so far hasn’t publicly responded to demand for share buybacks and still focuses on renewable investments, expecting to spend €55 billion ($61 billion) in total on green technologies by 2030.
One of the funds that has been calling on RWE to consider a share buyback is London-based hedge fund Covalis Capital, according to people familiar with the matter. Activist investors Selwood Asset Management and Enkraft Capital have also criticized the company for not returning cash to shareholders.
“We have good relations with RWE’s investor relations team and have met management several times over the years,” Zach Mecelis, founder and chief investment officer of Covalis Capital, said in response to Bloomberg News query. “The management has the right skillset and we agree with them on many topics. We have some disagreements on tactical issues which we discuss with them but the issues are complex and investors need to give management time.”
Separately, RWE’s Krebber said in a Bloomberg interview on Wednesday that the company isn’t looking to acquire power generation, ending speculation around the company potentially buying a stake in US power-plant giant Calpine Corp.
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