Voss Capital urges Sempra to spin off Oncor

Activist hedge fund Voss Capital urged Sempra Energy to separate its Texas transmission unit Oncor into an independent company in a letter to investors. The firm estimated a standalone Oncor could fetch as much as $78 billion by the end of 2028 and holds about two million Sempra shares.

Voss argued Sempra’s current structure combines three distinct businesses — a California utility, Oncor in Texas, and Sempra Infrastructure’s liquefied natural gas export projects — which masks the value of the individual assets. The letter noted Sempra’s roughly 80% stake in Oncor could be worth more than the market currently assigns to the combined company.

The investor cited rising electricity demand in Texas and a large pipeline of regulator-approved grid projects as key drivers for a higher valuation for a standalone Oncor. Voss highlighted that Oncor faces less exposure to wildfire-related liabilities that have affected California utilities, and that its capital spending plans are more predictable because they rely on approved expansion work tied to population and economic growth in the state.

Oncor supplies power to more than four million homes and businesses across Texas and operates about 144,000 miles of transmission and distribution lines. Texas is one of the fastest-growing power markets in the United States, and forecasts from the Electric Reliability Council of Texas project materially higher peak electricity demand in the coming years, creating greater need for transmission and grid expansion.

Voss pointed to growing investor interest in energy and utility assets as electricity demand rises due to data centers, artificial intelligence infrastructure and broader industrial electrification. The firm wrote that those trends, together with Oncor’s project backlog, could support faster standalone growth for the transmission business than for Sempra’s other operations.

Sempra acquired a controlling interest in Oncor in 2018 in a deal valued at $9.45 billion. Voss Capital has previously pursued shareholder campaigns at Griffon Corp and PAR Technology. Sempra and Oncor did not provide public comment in response to the activist proposal.