Activist investor pushes RWE to dump coal and boost energy company’s value

After acquiring a stake in RWE, Germany’s largest energy company, activist fund Enkraft is pushing for the company to divest its brown coal division, Reuters reports. In a letter to the company’s management seen by Reuters, Enkraft said it owned more than 500,000 shares in RWE valued at 16.4 million euros. The stake gives the investor the right to request items be put on annual general meeting agendas. News website Der Spiegel notes that despite holding relatively small stakes, investors like Enkraft can nevertheless exert pressure on the company by making demands public and convincing other shareholders to follow suit. In its letter to CEO Markus Krebber, Enkraft said RWE was "no longer investible" for many due to stricter sustainability criteria. Divesting RWE’s lignite operations and focusing on renewable energy would bring “with it an enormous potential to raise value", Enkraft managing director Benedikt Kormaier said. RWE has offered to discuss its business strategy with Enkraft, an RWE spokesperson told Reuters.

While RWE has undergone a major shift in recent years and become one of Europe’s leading providers of renewable energy, the company still operates legacy coal and nuclear assets, One of Europe's largest emitters of CO2, RWE had 8.55 GW of lignite assets at the end of 2020 - more than a fifth of its total installed generation capacity. RWE plans to invest 5 billion euros in the expansion of renewable electricity by 2022 and shut down two-thirds of its lignite capacity by 2030. Coal-fired power generation in Germany is due to end in 2038. Krebber has called for the next German government to clear hurdles currently hampering the energy transition.