SHARES in Scottish Hydroelectric owner SSE have risen following news the energy giant is in talks to sell its retail business to smaller rival Ovo.

Perth-based SSE announced on Saturday that it was in discussions with Ovo over the possible sale of its energy services arm, which supplies energy and related services to around 5.7 million household customers across Great Britain.

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SSE decided to quit the retail business in order to concentrate on renewable energy generation and the distribution business after facing challenges.

The company and other big six giants have lost customers to a range of new entrants in recent years. The introduction of the cap on variable tariffs by Ofgem in January has created complications.

Ovo was founded in 2009 and has grown to become a significant independent energy supplier with 1.5m customers.

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In February the Bristol-based firm announced Japanese giant Mitsubishi was taking a 20 per cent stake in the group in return for providing an undisclosed amount of funding to support growth.

Ovo did not comment on the announcement regarding the talks with SSE, which said no agreement regarding the terms of any transaction had been entered into.

Shares in SSE closed up 15p at 1,109.5p.