Major disposals take Perth-based utility giant SSE halfway to £2bn target
SSE, the Perth-headquartered energy giant, has agreed a near-£1 billion deal to sell its stake in three energy-from-waste facilities under plans to raise at least twice that amount by next autumn.
The group said it had agreed the sale of its 50 per cent holding in the West Yorkshire multi-fuel sites for £995 million. SSE was part of a joint venture on two sites in Ferrybridge and one in Skelton Grange.
The disposal – to an infrastructure fund managed by First Sentier Investors – comes as part of the Scottish group’s proposals to raise at least £2bn by selling off unwanted assets.
The FTSE 100 company recently said it would be pressing ahead with its previously announced £7bn-plus investment to “spur the green economic recovery”. It is largely focused on key wind farm operations across the UK.
Finance director Gregor Alexander said: “This sale marks a major step in our plans to secure at least £2bn from disposals by autumn 2021, with just over £1.4bn now delivered.
“While these multi-fuel assets have been successful ventures for SSE, they are non-core investments and we are pleased to have agreed a sale that delivers significant value for shareholders while sharpening our strategic focus on our core low-carbon businesses.
“Our disposal programme demonstrates how the company can create value from our assets and supports our plans to invest £7.5bn over the next five years in the low-carbon infrastructure needed to stimulate a green economic recovery and help the UK transition to a net-zero future.”
The latest sale follows that of SSE’s stake in Walney Offshore Wind Farm to Greencoat UK energy for £350m, and an agreement to sell its 33 per cent interest in meter asset provider MapleCo for around £90m in net proceeds.
Mark Nelson, an analyst at Killik & Co, noted: “The sale is part of the company’s strategy to raise £2bn of divestments by autumn 2021, and on top of previously announced sales, takes SSE almost 75 per cent of the way to the target.
“The divestments will help to strengthen the balance sheet and support the company’s plans to invest £7.5bn in low-carbon energy infrastructure over the next five years.
“We continue to like SSE as a play on two structural growth opportunities; electricity networks and renewables, in particular the growth in UK offshore wind, and [this latest] divestment will support the company’s increased focus on these two areas and can be considered a positive. We reiterate our ‘buy’ recommendation.”
In July, SSE said it expected to take a full-year profit hit of up to £250m from the coronavirus crisis, which has impacted the demand for power, particularly among industrial users.
In a trading update, the group said the Covid impact on operating profit for the first three months of trading was in line with its expectations, with the total for 2020/21 still anticipated to be in the range of £150m to £250m, before mitigation.
Chief executive Alistair Phillips-Davies told investors: “Whilst the wider economic implication of the coronavirus continues to impact on the business, we’ve been investing in the green economic recovery.”
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