We have no specific time horizon at all, ”says Enkraft Capital managing director Benedikt Kormaier in an interview with the FAZ. With this announcement at the latest, RWE should be clear that the discussion about its lignite activities will not end anytime soon. Kormaier and his advisor, the former Goldman Sachs banker Thomas Schweppe, have committed themselves to a mission: RWE should spin off its lignite activities faster than previously planned. Schweppe also has a reason for this: “The group is massively undervalued on the stock exchange.” The duo wants to change that and has addressed a letter to the board of directors. The demand: make it faster! RWE replies that the exit has long been a done deal, but that such a step cannot be brought forward indefinitely. Kormaier and Schweppe see it differently.“Compared to its peer group, that is, to similar energy companies, RWE will be in a much worse position. Time is of the essence. It is up to RWE to make structural proposals now, ”says Kormaier.
Doubling the share price?
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A concentration on renewable energies could roughly double the share price, Enkraft Capital wrote in a first letter to RWE CEO Markus Krebber a few weeks ago. "In recent years, RWE has not managed to formulate and implement a coherent strategy for the group on how the company can manage the transition from a large conventional energy producer to a leading producer of renewable energies," it said. In the meantime, RWE has presented the quarterly results and held a capital market day for the shareholders. The topic of “handling lignite” was left out - from the point of view of Kormaier and Schweppe, disappointing. "To a certain extent, the Capital Markets Day was a topic that was missed: the most important strategic topic,the discontinuation and detachment from lignite activities remains unmentioned, "commented Kormaier on the investor day and followed up in an interview with the FAZ. “Worldwide, the greatest focus is on radical reductions in CO2 emissions. The RWE Executive Board does not seem to have sufficiently recognized the urgency. "
Now RWE will have to be prepared for new post.
RWE has so far adhered to the coal compromise negotiated by the German government, which is still in charge, which sets the timetable and guarantees RWE around 2.6 billion euros in compensation payments.
As an interim goal, RWE has committed itself to taking around two thirds of its lignite capacity out of the market by 2030.
But new movement may now come into the matter.
The "Handelsblatt" reported last week that the new federal government could pursue the plan for a kind of coal foundation, an idea that was also brought into play by IG-BCE boss Michael Vassiliadis.
The RAG Foundation, which was established in 2007 to handle the coal mining industry and take care of the perpetual burdens, could serve as a model.
Activist shareholders like Enkraft currently use the momentum when arguments from a shareholder value perspective and sustainability considerations coincide.
Sustainability, and climate protection in particular, is currently attracting a great deal of attention.
The participation of the Greens in the new federal government should be seen as a sign of this, as well as the attention that Greta Thunberg and the Fridays for Future movement are receiving.
"Active" instead of "activist"
“We don't see ourselves as activist shareholders,” says Kormaier. “Active is better.” The term “activist” is associated with the fact that shareholders only stand up for a cause because they speculate on a short-term success of their action and then quickly leave the object of desire again. “It is pretended that our goals are totally arbitrary. In fact, we've been in this area for years, "says Kormaier, adding:" I'm not a fund manager, I invest my own money. "In addition to his activities at Enkraft, Kormaier is also responsible for a significant portfolio of hydropower plants as well as wind and solar parks. The family has been developing, building and operating renewable energy systems since the 1990s.
In 2019, Enkraft joined the wind power developer PNE. The infrastructure fund of the investment bank Morgan Stanley wanted to take over the PNE share for 4 euros and then take it off the stock exchange. Far too little, thought Enkraft. In the end, Morgan Stanley called off the takeover and only became a major shareholder. Enkraft Capital is also still involved. At the German energy company Energiekontor, Enkraft has so far not been able to implement any changes, but has sold the shares at a high profit.
As a rule, Enkraft only invests in companies with relatively small blocks of shares.
At RWE there are a little more than 500,000 papers.
Seemingly little, given the energy giant’s more than 672 million shares outstanding.
500,000 is, however, an important threshold in company law.
Paragraph 122 (2) regulates that "shareholders whose shares together make up one twentieth of the share capital or the pro rata amount of EUR 500,000 (may) request that items be placed on the agenda and announced".
This would give other shareholders the opportunity to jump on Enkraft's bandwagon.Keywords: