eEnergy Group (AIM: EAAS ) said it has made an investment in eEnergy Insights (EIL) a newly formed specialist smart metering measurement equipment and analytics business.
The Group, which operates as an "Energy Efficiency-as-a-Service" business in the UK and Ireland, has made an initial cash investment of £0.126m into eEnergy Insights, in the form of loan notes, as well as a nominal equity investment, resulting in a 33% equity interest.
The Group highlighted that EIL has acquired certain trade assets out of the administration process of Measure My Energy ("MME") and certain associated intellectual property assets.
The assets acquired include proprietary hardware and software, which allow customers to analyse and monitor itemised ('behind-the-meter') energy usage data via a live cloud portal. eEnergy Group told investors that the book value of the assets acquired was £0.7m.
Since MME was founded back in 2012, the Company has deployed thousands of monitoring units across a broad range of business customers in the UK and Far East, including companies such as EDF Energy, B&Q, Travelodge, National Grid and Costa Coffee.
In line with its stated strategy, eEnergy stated that working with eEnergy Insights will allow it to “offer its customers validation of energy savings delivered on their energy efficiency projects, and facilitate additional efficiencies through a Metering-as-a-Service proposition.”
eEnergy intends to support EIL to become a leading specialist smart metering equipment and analytics business, which could include EAAS taking an increased ownership interest.
"Access to granular energy usage data is central to our strategy to build an integrated energy management and energy efficiency platform for customers,” said CEO of eEnergy Group, Harvey Sinclair.
He added, “The opportunity for a minimal investment to partner with eEnergy Insights and access the high-quality proprietary 'behind-the-meter' technology of MME is a big step forward in delivering this platform. It means we can offer our growing customer base even more ways to deliver energy efficiency projects, saving both money and cutting carbon."
Last month, EEAS said it had delivered a strong first half outturn on organic and total revenue growth metrics and said it continues to see “strong organic growth” from higher demand in the market for energy efficiency solutions, particularly, for its EEaaS proposition.
Future growth in the business appears to be underpinned by both the increasing pace of the Group’s projects completed during the six-month period as well as the increasing average value of each project. The Group said that both the successful acquisitions of RSL and Beond has provided it with further confidence in its accelerated growth strategy through M&A.
Shares in eEnergy Group have more than doubled in value since the beginning of the year. The stock was trading 3.85% higher this morning at 27p following the announcement.
Reasons to EAAS
eEnergy intends to develop into a broader energy services company and acquire other businesses in the energy management sector. It is currently focused on providing ‘Light-as-a-Service’ to commercial customers and helps businesses and schools switch to LED lighting, typically for a fixed monthly service fee, avoiding any upfront payments.
For businesses and schools, the energy savings are greater than the monthly service fee, allowing them to unlock free cash-flow from day one as well as to improve the quality of their lighting and reduce carbon emissions.
Rapidly Expanding Market
The market in the EU for energy efficiency services was approximately €25 billion in 2017 and is expected to double by 2025.
In November 2020, eEnergy launched the ‘Green Energy Initiative’, a scheme focused on helping more UK schools, which are eligible for part but not full Government funding, to reduce carbon emissions and save money by switching to cheaper, efficient LED lighting.
The Initiative has been set up by eEnergy to work in conjunction with the Public Sector Decarbonisation Scheme ("PSDS"), a UK Governmental entity which provides grants for public sector bodies in order to fund energy efficiency and heat decarbonisation measures.
eEnergy believes only 20% of schools have upgraded to date and expects to be able to increase its addressable market as the ‘Initiative’ will either make up any shortfall or fully fund the switch, using just its Funding Partners.
Strong Supply Chain
In November 2020, eEnergy signed an exclusive OEM partnership with Venture Lighting Europe Limited ("VLE") to provide eLight-branded LED technology.
Chosen after a tender process which included some of Europe's leading OEM manufacturers, with a 35-year heritage, VLE forms part of Advanced Lighting Technologies, a US-based group which has 600 employees and an annual revenue of over $130m.
eEnergy believes an integrated supply chain for eLight will maximise operating efficiencies and is a significant market differentiator. In particular, it will hold dedicated stock lines for eLight, ‘significantly’ reducing the time that it takes to complete installation projects.
ESG merger and acquisitions strategy
eEnergy has an active ‘Climate Action Initiative’ with energy efficiency marked as the #1 solution for many commercial buildings to reduce their energy consumption.
The Company has a declared M&A strategy in this space, which it expects to complement its core business and lead to an exciting ESG Investment Case for Investors.
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