Investing
Hedge fund Elliott says it has not made demands at Germany’s RWE
Global Banking & Finance Review®
Company
(Reuters) -Elliott Investment Management said on Wednesday that it has not engaged with German utility RWE AG about an investment in the company and has not laid out any demands.
The hedge fund issued a statement in reaction to a Bloomberg News report, citing unnamed sources, that said Elliott has built a significant investment in RWE. The report also said Elliott is pushing the company to initiate a share buyback program.
“Bloomberg’s report is false. Elliott 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,” the statement said.
Elliott declined to comment on whether it has built a position or is in the process of building one.
RWE declined to comment.
Frankfurt-listed shares in RWE turned positive on the report and were up 0.6% at 1803 GMT.
Last month, Germany was examining whether it could require investors to disclose a 3% stake that comprises a combination of shares and derivatives after Italy’s UniCredit acquired a hefty stake in Germany’s Commerzbank.
Buybacks have been a key sticking point for RWE investors who pressed its management for clarity on the subject during a call on its final full-year results in March.
Then, in May, Chief Financial Officer Michael Mueller gave the clearest signal to date that it may consider returning cash to investors via buybacks.
In 2023, RWE rejected a motion by activist fund ENKRAFT against the utility’s plans to seek authorization from shareholders to issue convertible bonds without giving existing investors the option to subscribe.
Elliott is one of the world’s biggest activist investors with roughly $70 billion in assets and a taste for taking on iconic companies if it feels they can perform better.
In the last months it pushed U.S. coffee chain Starbucks to make changes and reached a truce with Southwest Airlines which adds a number of new directors to the board in a bid to boost returns.
The hedge fund has previously built positions in some companies through derivatives and then converted them into common stock later. Other investors closely watch Elliott’s trading activities for hints on which companies the hedge fund may consider pursuing as targets.
Activist investors tend to try and build their stakes before approaching management to lay out criticisms.
(Reporting by Bipasha Dey in Bengaluru; additional reporting by Christoph Steitz and Svea Herbst-Bayliss; editing by Alan Barona and Stephen Coates)
A hedge fund is an investment fund that pools capital from accredited investors and employs various strategies to earn active returns for its investors, often using leverage and derivatives.
A share buyback occurs when a company repurchases its own shares from the marketplace, reducing the number of outstanding shares and often increasing the value of remaining shares.
Corporate governance refers to the systems, principles, and processes by which a company is directed and controlled, focusing on the relationships among stakeholders.
An investment is an asset or item acquired with the goal of generating income or appreciation. Investments can include stocks, bonds, real estate, and other financial instruments.
An activist investor is a shareholder who uses their equity stake in a corporation to promote changes they believe will increase the value of the company, often through direct engagement with management.
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