eEnergy: Acquisition and Placing

15th September 2021 | eEnergy Group

Proposed Acquisition of UtilityTeam

Proposed Placing to raise approximately £12 million

eEnergy Group plc (AIM: EAAS), a leading “Energy Efficiency-as-a-Service” (EEaaS) business in the UK and Ireland, is pleased to announce that it has conditionally agreed to acquire the entire issued and to be issued share capital of UtilityTeam TopCo Limited and 5% of the issued share capital of UtilityTeam Trading Limited (not currently owned by UtilityTeam Topco Limited) (together, “UtilityTeam”), a UK top 20 energy management business providing comprehensive management, consultancy and procurement services to industrial and commercial clients with a particular focus on large, complex, multi-site portfolios (the “Acquisition”).

Total consideration for the Acquisition is up to £21 million, on a cash-free and debt-free basis. The initial consideration of £15,855,000 comprises initial cash consideration of £9,527,500 (“Initial Cash Consideration”) payable on completion and further cash consideration of £2,000,000 payable on or before 31 December 2021, as well as £4,327,500 which will be satisfied by the issue of 18,031,250 new Ordinary Shares (the “Consideration Shares”) to be issued at a price of 24 pence per Ordinary Share.

An earn-out consideration of a maximum of £5,145,000 will be paid in cash up to £1,472,500 and any balance in Ordinary Shares (at the higher of 24 pence per Ordinary Share or the 30 day VWAP to 31 December 2021), based on a multiple of UtilityTeam’s EBITDA for the year ending 31 December 2021, paying £7 for every £1 of EBITDA generated in excess of £2,265,000, up to a maximum EBITDA of £3,000,000.

The Initial Cash Consideration will be funded through a Placing of approximately £12 million (gross) to new and existing institutional, at the Placing Price, being 15 pence per Placing Share.

The Placing is being conducted by way of an accelerated bookbuild process (“the Bookbuild”), which will be launched immediately following the publication of this Announcement.

Transaction highlights:

  • eEnergy has agreed to acquire UtilityTeam, a top 20 energy consulting and procurement business whose services aim to reduce costs for clients whilst supporting their transition to Net Zero. UtilityTeam’s Net Zero strategy and capability is fully integrated into its traditional energy procurement business, with a focus on large, complex multi-site portfolios;
  • Total Consideration for the Acquisition will be for up to £21 million, on a cash-free debt-free basis, subject to customary working capital adjustments, with initial consideration of £15,855,000 comprising £11,527,500 in cash and £4,327,500 in Consideration Shares at 24p per ordinary share, representing a premium of 37.1% to the closing mid-market price for an Ordinary Share on 14 September 2021, being the last practicable date prior to this Announcement;
  • An earn-out consideration of a maximum of £5,145,000 will be paid in cash up to £1 million and any balance in Ordinary Shares (at the greater of 24 pence per Ordinary Share or the 30 day VWAP to 31 December 2021), based on a 7.0x multiple of UtilityTeam’s EBITDA for the year ending 31 December 2021, paying £7 for every £1 of EBITDA generated in excess of £2,265,000, up to a maximum EBITDA of £3,000,000.
  • The initial consideration represents an acquisition multiple of 7.1x of the adjusted EBITDA[1] of UtilityTeam’s adjusted EBITDA for the year ended 31 December 2020;
  • The Acquisition is in-line with eEnergy’s stated integrated energy services strategy to develop as a broader Energy Services company through its “buy and build” strategy, targeting adjacent businesses with energy management and efficiency capabilities, which offer strategic and synergistic growth opportunities;
  • UtilityTeam has long-term, strategic relationships with its mid-market customer base, providing the Group with a strong cross-sell opportunity through which it can leverage the Group’s existing Beond platform;
  • UtilityTeam has strong recurring and contracted revenues from its industrial and commercial customers, with highly attractive quality of earnings expected to benefit the enlarged Group;
  • The Acquisition is expected to be significantly earnings enhancing immediately (i.e. in the year ending 30 June 2022);
  • Chief Executive Officer of UtilityTeam, Delvin Lane, will join the Company’s management team and will lead the Group’s enlarged Energy Management as a Service (EMaaS) Division;
  • An integration team will work closely with the EMaaS team, and oversee initiatives to accelerate growth, including cross selling and consolidating operational activities, ensuring a single technology platform for all EMaaS client data and creation of specific sales channels for Beond and UtilityTeam respectively;
  • The Acquisition is to be part funded through a Placing of approximately £12 million at 15.0 pence per Placing Share, to be conducted by way of the Bookbuild. The Placing Price represents a discount of 14.3% to the closing mid-market price for of an Ordinary Share of 17.5 pence on 14 September 2021, being the last practicable date prior to this Announcement;
  • The Placing is not conditional on shareholder approval. The Placing and Acquisition are inter-conditional and will complete simultaneously with completion anticipated to occur on 17 September 2021; and
  • The Bookbuild will be launched immediately following this Announcement. Singer Capital Markets Securities Limited (“Singer Capital Markets”) and Turner Pope Investments (TPI) Limited (“Turner Pope”) are acting as joint bookrunners (together the “Joint Bookrunners”) in connection with the Placing.

Harvey Sinclair, CEO of eEnergy, commented:

“The acquisition of UtilityTeam, when combined with our existing businesses, gives eEnergy the ability to offer customers a broad range of services and expertise in energy management, energy efficiency and intelligent measurement & analysis. It is in line with our strategy to “buy and build” a portfolio of complementary operations that can take full advantage of market demand for zero carbon energy and energy data.

“For investors, we will be able to provide exposure to the links in the value chain of energy conservation, management and transition in areas that we expect to grow significantly in the years ahead. This is an important milestone in our development and one which the Board believes will benefit all of our stakeholders – customers, staff and shareholders.”

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