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French utility Engie and German energy supplier E.ON are among the companies in talks with Ovo over potential bids for the UK group’s retail arm as it faces pressure to raise money to meet regulatory capital requirements.
EDF has also expressed an interest in a deal, according to people familiar with the matter.
A deal would help Ovo to meet its capital requirements and fund its expansion plans, some of the people said. It is not yet clear whether any deal would involve a sale of the entire retail business or only a stake.
FTSE 250 utility group Telecom Plus, which trades as Utility Warehouse, has also held talks about taking a stake in Ovo’s UK retail business, the FT previously reported. Ovo’s retail business could be worth more than £400mn, according to people familiar with the matter.
Ovo has been seeking to raise investment over the past year to meet the regulator Ofgem’s capital buffer requirements, which are meant to stabilise the sector after a series of collapses of energy providers in 2021 and 2022.
Ofgem last year granted Ovo more time to meet the targets in an effort to relieve pressure on the company.
Ovo has received various proposals including a plan from the company’s founder, Stephen Fitzpatrick, to inject £200mn into the business, which would allow him to retake majority control of Ovo for the first time since 2022.
Fitzpatrick, formerly chief executive and now a director of Ovo Group, founded Ovo in 2009 as part of a new breed of companies set up to challenge the dominance of the Big Six providers such as EDF and Centrica. A decade later it became one of Britain’s largest household energy suppliers when it bought FTSE 100 company SSE’s retail energy supplier.
Ovo, Engie and EDF declined to comment. E.ON did not immediately respond to a request for comment.
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