Funds bet against Npowerless SSE as systems upgrade looks set to cost dearly

Hedge funds have started to bet heavily against SSE as the energy firm faces potentially huge upgrade bills after its merger with Npower fell through.

London-based Marshall Wace and US Worldquant have taken out a combined £171m so-called short position.

The funds have borrowed and then sold shares in SSE, hoping to buy them back  cheaper to return to the owners if the company’s valuation drops.

The recent bets mean that nearly 1.4 per cent of SSE’s shares are out on loan, up from no disclosed short positions just over a month ago.

It marks the biggest short holding in the company since the current disclosure regime began in 2012, data from Castellain Capital shows.

It comes as SSE faces a bill which could reach up to £200m to make its systems compatible with smart meters, sources told the Mail on Sunday.

However, an SSE spokesperson told the paper: “Our billing system performs well and will do so for years to come.

“Technological advancements mean it’s easy to build all required functionality into the existing system to ensure it’s fit for the future.”

SSE was unable to comment when contacted by City PM yesterday.