SSE snaps up Energy Solutions Group for £72m
LISTED utitlity company SSE has acquired Altrincham-based Energy Solutions Group in a deal worth up to £72m.
Based on Atlantic Street in the Broadheath area of the south Manchester town ESG is a designer and provider of energy management solutions. It was previously owed by Bridgepoint Development Capital and Warrington-based investor PHD Equity Partners – the fund set up by the partners of Daresbury-based corporate finnance firm Dow Scofield Watts.
SSE is paying a £66m ins cash for the 340-strong business with the potential for a further £6m if agreed targets are met.
ESG works with private and public sector customers to identify improvements in their management of energy consumption; and to install, maintain and support building management systems and solutions that support this. ESG can typically save its customers around 20% to 30% of their energy consumption.
The existing management team at ESG will stay on and the company will continue to trade as The Energy Solutions Group. SSE xpected to earn annual operating profit of over £10m within five years, in addition to the commercial synergies that it will bring to its Enterprise division.
Jim McPhillimy, SSE’s managing director, Enterprise, said: “Managing energy costs and environmental impact are big priorities for businesses and other organisations. As a responsible company focused on the long term, we believe it is in SSE’s interests to make the consumption of energy more sustainable. ESG is a leading provider of energy management solutions and these will be offered to SSE’s existing and potential new customers as part of a significantly increased presence in the growing business-to-business market for energy services.
“This market will be increasingly important in the next few years, and SSE’s programme to dispose of assets and businesses that are not core to its future plans is designed to enable the company to make a success of those opportunities which are, such as energy services. The disposal programme is well under way and we expect to report substantive progress in the autumn.”
DSW Corporate Finance Limited acted for ESG and Bridgepoint Development Capital on the transaction. Partner Mark Watts said: “The business is a fast growing solution provider in the developing market for business to business energy services. The group’s energy data analytics capability together with the team’s technical energy management skills proved a key attraction to SSE in its strategy to make the consumption of energy more sustainable.”
Andy Dodd from PHD Equity Partners added: “We invested in ESG in 2011 as we believed in the growth potential of the energy management market and the strong market position of ESG, the management team have developed a range of energy services capability that has delivered excellent growth and positions them to develop strongly under the ownership of SSE.”
ESG was also advised by Laytons (legal – company), Gateley (legal – management), Dow Schofield Watts Transaction Services (vendor due diligence).
Jodi Birkett and Tim Corfield at Deloitte’s Manchester office provided financial due diligence for SSE.
A corporate team from EY in Manchester led by partner Tim Morris introduced SSE to ESG, and subsequently provided strategic advice to the shareholders, including Bridgepoint Development Capital (BDC), throughout the transaction process.
