This is because FTSE 100, SSE PLC (LON:SSE), a publicly listed energy company, held a rally on Tuesday to announce the sale of 50% of the stake in the waste venture from the two Energy.
Two projects, Multifuel Energy Limited (MEL1) and Multifuel Energy 2 Limited (MEL2), will be sold to European Diversified Infrastructure Fund III, an infrastructure fund managed by First Sentier Investors, with cash considerations of £995 million. The transaction is expected to reach completion after it is granted antitrust approval by the European Commission.
Currently, the MEL1 and MEL2 ventures are jointly owned by SSE and Wheelabrator Technologies Inc and consist of operational Ferrybridge Multifuel 1 and Ferrybridge Multifuel 2 facilities (MEL1) and the Skelton Grange Multifuel Development Project (MEL2). All of these are found in West Yorkshire.
The two MEL1 components each have a capacity of 75mW and can process approximately 725,000 tons and 675,000 tons of waste each year. MEL2 Component is set to reach financial closures around April 2021 and will begin commercial operations in 2025. It has a capacity of 45MW and is expected to be able to handle 400,000 tons of waste per year.
The sales decision followed SSE, identifying two ventures as early sales priorities to free up £2 billion from disposal of non-core assets by next fall.
Today’s announcement follows an agreement to sell 25.1% unmanaged stock at Walney Offshore Wind Farm, followed by an agreement to sell 33% stake in Greencoat UK Wind at UK Wind for £350 million, followed by SSE to sell 33% stake in meter asset provider Mapleco, which receives approximately £90 million of net revenue upon closing.
With these three disposals, SSE is more than 70% of the way to complete your disposal target. With revenue revenues, the company said it plans to invest £7.5 billion in low-carbon energy infrastructure over the next five years, reducing UK emissions and reducing net debt.
SSE sales to spur future investments in low carbon energy
Speaking about the announcement, Gregor Alexander’s company finance director commented.
“This sale is a major step in our plan to secure at least £2 billion from disposal by fall 2021, and is now over £1.4 billion. These multifell assets are successful SSE ventures, but we are pleased to be a non-core investment and agreeing to sales that will bring great value to shareholders and strategically focus on our low-core carbon business.”
“Our disposal programme supports our plans to invest £7.5 billion over the next five years in the low-carbon infrastructure needed to demonstrate how the company can generate value from our assets, stimulate the recovery of the green economy and support the UK’s transition to a zero future.”
Investor’s Notes
Following the news, SSE shares rose at 3.85% or 51.00p, with 1,377.00pa share as of 11:15 on 13/10/20, which is about 4% behind the analysts’ target price of 1,418.30pa share, a six-month high in July.
Currently, the analyst has a consensus “pending” rating of 15.86 for the group’s equity, AP/E ratio and has been assigned a “underperformance” rating of 61.74% by the MarketBeat community.
