Investment bank tells clients to sell shares in EDF amid fears that its Hinkley Point connection could put payouts under threat

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Investment bank Investec has advised clients to sell shares in French energy group EDF amid fears that its connection with the nuclear plant at Hinkley Point C could put payouts to shareholders under threat.

The nuclear development was trumpeted last week as the Chinese government confirmed plans to invest £6billion in EDF’s scheme to build the power station in Somerset.

But Investec issued a ‘sell’ note on EDF, advising clients to dump the stock. The bank said: ‘We are unconvinced about the commercial logic of EDF’s investment in Hinkley Point C.

Power cut: Hinkley Point C was trumpeted last week as the Chinese government confirmed plans to invest £6 billion in EDF’s scheme

‘The prospect of many years of cash outflows can only add to the strain on EDF’s resources and threatens the dividend.’

Future nuclear decommissioning costs in France are already set to affect EDF adversely and the bank questions whether the company has set aside enough cash to cope with this and the expense of refurbishing existing N-plants.

EDF has said it may sell £8billion of assets to reinforce its finances, but Investec questions whether this will be possible.

There are security fears over China’s involvement. The deal sees China General Nuclear Power Corporation take a 33.5 per cent stake in the plant’s construction, with EDF holding the remainder.