Activist hedge fund Voss Capital is urging Sempra Energy to spin off its Texas electricity transmission business, Oncor, arguing that the move could unlock significant shareholder value and create one of the fastest-growing standalone utilities in the US, according to a report by Reuters.
The report cites the Houston-based investment firm as writing in a letter to investors that an independent Oncor could command a valuation of up to $78bn by the end of 2028, driven by accelerating electricity demand in Texas and a large pipeline of regulator-approved infrastructure investment projects.
Voss Capital, which holds approximately two million shares in Sempra, contends that the company’s current structure masks the value of its underlying assets. The hedge fund said Sempra combines three distinct operations — its California utility business, Texas-based Oncor, and Sempra Infrastructure’s LNG export development activities — making the overall group unnecessarily complex for investors to assess.
According to the letter, Sempra’s roughly 80% ownership stake in Oncor alone could eventually exceed the market value currently assigned to the combined company.
The activist investor also highlighted Oncor’s comparatively lower exposure to risks that have weighed on California utilities in recent years, particularly wildfire-related liabilities. Voss argued that the Texas-focused utility benefits from more predictable capital expenditure plans tied to approved grid expansion projects supporting economic and population growth across the state.
Investor appetite for energy and utility assets has strengthened in recent years amid rising electricity demand linked to artificial intelligence infrastructure, data centre growth, and broader industrial electrification trends.
Texas remains one of the fastest-growing power markets in the US. Forecasts from the Electric Reliability Council of Texas project peak electricity demand will rise materially over the coming years, increasing pressure on grid operators and transmission providers to expand infrastructure capacity.
Oncor currently supplies electricity to more than four million homes and businesses across Texas through a network spanning over 144,000 miles of transmission and distribution lines. Sempra acquired its controlling interest in the utility in 2018 in a deal valued at $9.45bn.
Voss Capital has become increasingly active in shareholder campaigns in recent years, having previously pushed for strategic changes at manufacturing group Griffon Corp and technology company PAR Technology.
Neither Sempra nor Oncor reportedly publicly commented on the activist proposal.
