10 February 2025 , 15:50
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Activist fund predicted to push for overhaul of oil company’s strategy and shake-up of board.
Shares in BP have jumped by 8%, its biggest rise since 2020, after it emerged that the activist investor Elliott Investment Management had taken a stake in the UK oil company.
The stock rose as investors bet that Elliott, a feared New York hedge fund known for its attempts to shake up listed companies, would push for an overhaul of BP’s strategy, along with a revamp of its board.
Elliott’s arrival could lead to the departure of BP’s chair, Helge Lund, and put pressure on its management to shift back more decisively towards fossil fuels, analysts said.
Shares in the 120-year-old company rose by more than 8% in early trading on Monday, before trading about 6% higher at 461p, the highest since last August.
Elliott, led by the billionaire Paul Singer, has amassed a significant holding in the British energy company, Bloomberg reported on Saturday.
The fund, best known for chasing the Argentinian government for debts for more than decade, has pushed for change at several large UK companies, including the drugmaker GSK, the energy company SSE and the housebuilder Taylor Wimpey.
BP’s shares have underperformed rivals after a series of missteps in recent years, including the dismissal of the former chief executive Bernard Looney for “serious misconduct” in September 2023, after he failed to disclose personal relationships with colleagues to the board.
Many investors are unhappy with the company’s direction, since Looney embarked on a plan to slash its oil and gas production and spend billions on renewable energy projects instead. While BP has since rowed back from its full green ambitions under the new chief executive, Murray Auchincloss, for some, the road ahead looks uncertain.
BP, which is valued at £75bn and is one of the largest companies on the FTSE 100, has even been touted as a potential takeover target as its share price has fallen by a quarter over the past two years.
“For BP, given the circumstances around the changes to its previous chief executive, we think any activist would call for a change in the chairperson at the very least,” said the RBC Europe analyst Biraj Borkhataria.
Analysts at Jefferies also believe that any board changes could include the departure of Lund. The Norwegian, who was at the centre of a high-profile storm over a £25m package at BG Group in 2015, has led BP’s board since 2019.
Jefferies analysts said: “Given Elliott’s track record, we believe its involvement could lead to board changes, portfolio rationalisation (with a focus on exiting low carbon assets and certain retail regions), and capital expenditure prioritisation on upstream projects,” such as oil and gas exploration and drilling.
BP will release its annual financial results on Tuesday, after setting out plans recently to cut thousands of jobs globally, equal to 5% of its workforce, to save billions in costs and appease shareholders.
Auchincloss is expected to set out a new strategy to tackle the company’s falling value, hefty debts and investors’ scepticism of its green energy aspirations at a capital markets day at the end of this month.
Richard Hunter, the head of markets at the investment platform Interactive Investor, said: “The shares have drifted by around 3% over the last year, in contrast to a gain of some 6% for rival Shell over that period, and it remains to be seen whether this latest speculation will provide a shot in the arm for what has been a relatively disappointing period for the group of late.”