Exclusive-RWE’s top shareholder group opposes call for more share buybacks.
RWE’s municipal shareholders, the biggest investor bloc in Germany’s top power producer, are opposed to calls for more share buybacks, including from activist investor Elliott, saying they would drain cash needed for renewable investments.
The rare comments by the Association of Municipal RWE shareholders (VkA), which together hold around 14% in the utility, provide support for RWE management amid growing investor criticism of its capital allocation.
RWE in March followed peers in cutting investments due to falling returns for renewable projects, prompting some investors to urge the group to increase and speed up an existing 1.5 billion euro ($1.7 billion) buyback programme instead.
These included Elliott, which holds close to 5% in RWE and is currently also running a high-profile campaign for change at oil major BP. Elliott has said RWE shares are undervalued and that it was “disappointment with the lack of clarity” over RWE’s commitment to shareholder value.
Other investors, most notably Deka Investment, Selwood Asset Management and Enkraft Capital, have also asked the group to expand buybacks to boost its shares, with Union Investment even calling for a special dividend.
“The municipal shareholders do not support demands for a special dividend or share buyback programmes,” Detlef Raphael, VkA’s managing director, told Reuters, marking the first time RWE’s municipal shareholders have commented on the matter.
Source: Globalbankingandfinance