(Bloomberg) -- Activist investor Elliott Investment Management has built up a sizable stake in RWE AG and is calling on the German utility’s management to consider a share buyback, according to people familiar with the matter.
The fund founded by billionaire Paul Singer amassed a stake in recent months and has spoken to top RWE executives about its demands, the people said, declining to be identified because the information is private.
The size of Elliott’s stake couldn’t be immediately learned. Under German regulations, investors need to disclose outright holdings when they reach 3%, as well as derivative interests of 5% or more.
Elliott declined to comment on whether the firm has a holding in RWE. A representative for Elliott said the firm “has not engaged with anyone at RWE in relation to an investment in the company, and has shared no views with RWE regarding buybacks or any other demands.”
On Wednesday, RWE’s shares at one point slumped to their lowest intraday level in more than four years, as Donald Trump’s victory sparked concerns around the future of US subsidies for renewable energy. The company has a market value of about €21.6 billion ($23.2 billion). RWE shares pared earlier losses in late trading on Tradegate after Bloomberg’s story.
Elliott’s move adds pressure on RWE, which has already been facing growing investor frustration over its declining share price and its focus on spending heavily on US expansion rather than share buybacks. Activist investors Selwood Asset Management and Enkraft Capital are among those that have criticized the utility’s strategy.
RWE hasn’t publicly responded to calls for share buybacks and remains focused on renewable investments, expecting to spend €55 billion in total on green technologies by 2030. The company is prioritizing building clean generation to meet AI-led demand growth in the US and Europe, Chief Executive Officer Markus Krebber said in a September interview.
Some analysts and investors are hoping RWE could change course when it releases its third-quarter earnings next week. Selwood last month urged the energy company to eliminate uncertainty around a share buyback program and establish a clear communication strategy. The German company should also set boundaries on M&As to avoid overreach in overseas markets, especially in the US, the London-based hedge fund said.
Elliott is one of the busiest activist investors and has waged high-profile campaigns at companies including drugmaker GSK Plc and power generator SSE Plc.
--With assistance from Eva Brendel.
(Updates with Elliott response in fourth paragraph.)
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