Hedge funds circle Scottish & Southern

Hedge funds circle Scottish & Southern

Hedge funds are buying into power supplier Scottish & Southern Energy in hopes of a bid for the company, currently valued at over £12bn.

The latest fund to have bought shares is Centaurus, headed by Frenchman Bernard Oppetit, who is understood to have made millions via a recent investment in British Energy.

It caused a splash in the UK in 2006 when it blocked a bid for engineering company Amec from private equity group Texas Pacific on the grounds that it was too low.

Centaurus has been joined at SSE by other hedge funds such as Lansdowne, GLG and Odey Asset Management.

Oppetit is known in the City as a canny investor and has built up Centaurus into a £5bn fund after leaving BNP Paribas, where he was head of proprietary trading. On its website, Centaurus says: 'We develop a close and constructive ongoing dialogue with the executives of the companies that we invest in, and focus on achieving an in-depth fundamental understanding of their businesses.'

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But Centaurus would not confirm its investment in SSE, as its policy is not to comment on 'market speculation'.

SSE is one of the few British electricity suppliers and generating firms not to have been acquired by foreign predators over the past decade, but now Vattenfall of Sweden and Eon of Germany are rumoured to be circling, and one or other may bid before the end of the year.

It is headed by chief executive Ian Marchant, who last month warned that the company's interim figures would be substantially lower than the past two years' because of volatile wholesale energy prices.

But it will recoup some of the extra costs by passing on higher prices to consumers: last week SSE, which has 8.8 million customers, said it was raising the cost of gas by 29.2 per cent and electricity by 19.2 per cent from Monday.

Up to 5.5 million homes signed up to Eon will also see their gas bills rise. Consumer groups have described the latest round of increases as a 'disgrace'. Of the 'big six' energy companies, just Npower and Scottish Power have still to raise prices. In May, SSE revealed that profits reached £1.23bn last year, up 14 per cent on the year before.

At the time, analysts predicted that the energy companies, which have already pushed through one set of tariff increases, would be forced to push through another round before autumn because wholesale prices for electricity and gas have not come down.

The average British gas bill has more than doubled in the past five years to £646 a year, while electricity bills have jumped from £244 to £412.

guardian.co.uk © Guardian Newspapers Limited 2008