(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.” A representative for RWE didn’t respond to requests for comment.
Shares of RWE were up 3.9% at 12:12 p.m. Thursday in Frankfurt, giving the company a market value of about €22.5 billion ($24 billion) and putting it on track for the biggest daily gain in more than two years.
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.
Germany has been grabbing investor attention with the country’s politics and economy both in turmoil. Chancellor Olaf Scholz this week called for a snap election after divisions over how to revive the lackluster economy triggered the breakup of his fractious three-party ruling coalition. The country’s manufacturing sector has been weighed down by soft foreign demand, and shares of German automakers fell on Wednesday over concerns the incoming Trump administration could raise tariffs on imported cars.
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 RWE share move in fifth paragraph and context on German economy in seventh paragraph.)
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