First Utility Eyes Share Sale As IPO Spark Fades

The biggest challenger to Britain's big six energy suppliers is preparing for an ownership shake-up as the prospect of a stock market listing recedes amid continued uncertainty about the industry's regulation.

Sky News has learnt that investors in Impello, the parent company of First Utility, approved at its annual meeting this month a resolution to conduct a secondary share sale in the coming months.

Financial advisers will be appointed to work with a steering committee formed of First Utility board members, according to City sources.

The move could result in a substantial chunk of the company's shares changing hands, although the outcome is unlikely to be clear for months.

Plans for the sale come just weeks after the Competition and Markets Authority (CMA) published a set of proposals for energy market reform which were roundly criticised by politicians and consumer groups for doing too little to penetrate the oligopoly of the six largest players.

One of the principal criticisms of the report was its proposal that would allow price comparison sites to conceal energy deals on which they would not earn commission.

Critics argue that this will inhibit, rather than promote, switching among consumers.

The CMA's proposals have yet to be implemented by the Government, and with the energy ministry being subsumed into the Department for Business, it may be some time before the industry has clarity about its intentions.

Under the leadership of Ian McCaig, its chief executive, First Utility has made significant progress establishing itself as a challenger to the likes of British Gas, Npower and SSE (LSE: SSE.L - news) .

At the end of June, according to figures from Cornwall Energy, a consultancy, First Utility had 24% of the domestic energy supply market outside the big six.

Nearly one million UK households have signed up to take gas or electricity from the company, which has quadrupled in size in the last five years.

It has sought to position itself as a consumer champion, cutting charges for customers who do not pay by direct debit, and launching a campaign to cut switching times.

First Utility claims to have saved British consumers £500m on their energy bills over the last eight years.

It has also entered the German energy market, and is now pursuing further diversification through the potential launch of products including insurance, broadband packages and connected-home services.

The forthcoming share sale will enable individual shareholders to trade stock that they may have held for many years, according to one source.

As well as management and other individuals, the oil giant Shell (LSE: RDSB.L - news) holds warrants in First Utility which would give it up to an 8% stake if specific value thresholds are met.

First Utility had begun preparing for an initial public offering, selecting investment bankers to work on a flotation about a year ago.

The company had also attracted interest from private equity firms including CVC Capital Partners, with a proposal said to be worth approximately £500m rejected by First Utility last year.

Amber Rudd, the former energy and climate change secretary, opened First Utility's new customer care centre in Coventry in one of her last engagements before replacing Theresa May as Home Secretary last week.

First Utility declined to comment on Wednesday.