RWE at Risk of Falling Behind in Renewable Energy Race

RWE risks falling behind in the fast growing and competitive renewables sector if it fails to quickly divest its brown coal activities, activist fund ENKRAFT said, criticizing management for failing to come up with a rapid solution. 

ENKRAFT in September disclosed a small stake in RWE, Germany's largest producer, calling for a separation of the group's brown coal division to shrug off a valuation discount that has weighed on shares. In a letter to RWE's Management, ENKRAFT said RWE did not address the issue at its capital markets day in mid-November, when the group said its value would rise as part of a 50 billion euro investment push. 

"Consequently, we have the impression that you fail to recognize the great strategic and economic importance of this issue for all RWE stakeholders," ENKRAFT managing director Benedikt Kormaier. ENKRAFT reckons that divesting brown coal - which is not part of RWE's core renewables business - will likely raise the firm's value by 20 billion euros, or 30 euros per share.