eEnergy Group acquires renewable energy firm Beond Group
(AIM: EAAS ) said it has conditionally agreed to acquire Beond Group Limited, a renewable energy consulting and procurement business, for approximately 2.6x Sales.
The "Energy Efficiency-as-a-Service" (EEaaS) business in the UK and Ireland, has proposed a total consideration for the acquisition, which includes £0.7m of surplus cash, of around £2.4m in cash and the issue of 64,948,456 consideration shares.
The cash component will be funded through a Placing of a minimum of £3.0m to new and existing institutional and other investors, at a Placing Price of 10.0 pence per share via an accelerated bookbuild process which is expected tom complete shortly.
eEnergy said Beond is a ‘top 20’ renewable energy consulting and procurement business, whose services aim to reduce costs for clients and tackle climate change. Its key offering is its proprietary platform used to run renewable energy reverse auctions for clients.
For the year to 31 December 2019, Beond's revenue grew 10.5% to £3.3m, with EBITDA of c.£0.5m at a margin of 14.1%.
eEnergy said its customer base is highly complementary to its own and believes it can provide ‘substantial energy efficiency opportunities’ for its Light-as-a-Service offering with its "as-a-Service'' offerings which it intends to bring to market.
The acquisition is in-line with eEnergy’s stated strategy to become a broader energy services firm with its "buy and build" acquisition strategy which targets adjacent businesses with energy management and efficiency capabilities as well as offering strategic and synergistic growth.
eEnergy said there is ‘a strong strategic rationale’ for the acquisition and outlined that it believes Beond will bring ‘a scalable technology platform with organic upside potential, as well as a highly complementary customer base and improved earnings quality to eEnergy.’
"The acquisition of Beond is the next step in our journey to delivering a sustainable future for our clients. Beond's, a climate action business, leverages award-winning technology to secure the best zero carbon energy supply for their customers,” said CEO, Harvey Sinclair.
He added, “With a focus on energy management, their technology will add significant value to eEnergy's existing client base by helping to make 'Net Zero' a reality.
Beond's platform is one of a very small number of specialised reverse auction technologies available to customers, securing the best priced zero carbon energy through a highly competitive auction process.”
Shares in eEnergy Group have increased by over 65% in the past three months to open flat this morning at 10.4p following the announcement.
Reasons to Follow eEnergy
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 Growing 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.
Superior 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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