uk energy management systems (ems) market landscape

© 2018 RocSearch. All Rights Reserved. 1

UK Energy Management Systems

(EMS) Market LandscapeSample Deliverable

© 2018 RocSearch. All Rights Reserved.

Table of Contents

▪ Executive Summary 02-07

▪ Market Definition and Value Chain 08-10

▪ Market Size and Growth Outlook 11-13

▪ Growth Drivers and Inhibitors 14-16

▪ Market Trends and Their Impact 17-20

▪ Key Energy Regulations 21-23

▪ Competitive Landscape 24-31

▪ Mergers and Acquisitions 32-37

▪ Investment-worthy Opportunities 38-53

▪ Appendix 54-60


Energy Management Systems have a wide array of end-users from households to power generation

companies, creating a c. £XXbn market that is expected grow at XX% for the next 5 years

Executive Summary (1/5) UK Energy Management Systems Market Study

Sources: RocSearch analysis across secondary data sources; Primary interviews with 15+ senior stakeholders in the EMS sector; Scanning 1,000+ companies in the EMS sector as part of the RocEye deal origination study

1) Energy Management Systems Market Definition

1.1) Application Areas

▪ The Energy Management Systems’ market in the UK includes:

• Products and Devices that connect to all electric equipment (HVAC, Lighting, IT Infrastructure etc.) within a residential or commercial establishment to gather and monitor energy consumption data

• Software and Related Service that provide Energy Data Services, Advanced Data Analysis, Invoice Management, Emissions Forecasting, Bill Validation, Predictive Maintenance, Energy Usage Reporting, Asset

Tracking, etc.

• Professional Services include Energy Surveys, Energy Performance Inspections, Reporting, Training, Audit and Certification, etc.

▪ These solutions find wide application across the entire energy lifecycle from power generation to distribution to final consumption by domestic and commercial customers

1.2) Segment Characteristics, Size and Outlook

▪ This study estimates the overall Energy Management Systems Market to be currently worth c. £XXbn and is expected to reach c. £XXbn by the end of 2022, growing at XX% CAGR

▪ Energy management products/ services are shaped by the distinct requirements of the end-user at different stages of the lifecycle and therefore, the market is segmented based on the type of end-user as:

• Industrial Energy Management System

- This end market includes Utilities (power generation companies, transmission and distribution companies) and Industrial establishments (manufacturing plants, industrial complex)

- The market is currently worth c. £XXbn and is expected to reach £1XXbn by the end of 2022, growing at XX% CAGR

• Building Energy Management System

- This end market includes commercial buildings, offices, hospitals, government and public buildings and similar establishments

- The market is currently worth c. £XXbn and is expected to reach £XXbn by the end of 2022, growing at XX% CAGR

• Home Energy Management System

- This end market includes homes and residential establishments

- The market is currently worth c. £0.3bn and is expected to reach £0.5bn by the end of 2022, growing at 12% CAGR

▪ UK continues to be one of the largest markets in Europe, although some experts believe that it is not at the forefront of technology adoption, especially in the Home Energy Management segment. This also explains the

relatively smaller size of the Home EMS segment.


Table of Contents










▪ Appendix 54-60


Energy management solutions (products, software and services) are used by utilities, industrial facilities,

commercial establishments and households to achieve cost savings through higher consumption efficiency

Market Definition UK Energy Management Systems Market Study

Sources: Presentation HEMS – Michigan Technological University (2016); Airedale; Bresaer; Mordar Intelligence; MarketsandMarkets; Advanced Energy Economy

Building Energy Management System

▪ End Market

Covers large segment load – commercial buildings, offices, hospitals,

government and public buildings and similar establishments

▪ Application Area

Used to control, monitor and optimise energy consumption of a building’s

systems such as lighting, HVAC and plant room equipment

▪ Major Players

ABB, XXX

Home Energy Management System

▪ End Market

These systems are designed for residential load


Used to monitor and optimise consumer’s energy consumption. Smart meter,

smart sensors, smart appliances are a few of the key components of HEMS

▪ Major Players

Sharp, PassivSystems, XXX

Industrial Energy Management System

▪ End Market

These systems are designed for utilities, manufacturing

facilities and any industrial complex


Typically used in electric substations, boiler plants, cogeneration plants,

electrical and thermal fluid distribution lines, pumps and fans, HVAC

systems, lighting systems

▪ Major Players

Cisco Systems, XXX

Energy Management

System

Based on the end-user application, EMS is classified into Home Energy Management System (HEMS), Building Energy Management System (BEMS), and Industrial Energy Management System

(IEMS)


Table of Contents










▪ Appendix 54-60


As one of the largest markets in the region, the UK Energy Management Systems market is estimated to be

worth c. £XXbn (c. 15% of Europe) and is forecasted to grow by more than XX% during 2017-22

Market Size & Growth Outlook UK Energy Management Systems Market Study

Sources: PwC, TEAM Energy, Wattics, RocSearch Analysis, Primary Interviews

0.23 XX XX XX XX XX XX XX XX

0.60 XX XX XX XXXX

XXXX

XX0.68

XXXX

XXXX

XX

XX

XX

XX

2014 2015 2016 2017 2018E 2019E 2020E 2021E 2022E

Industrial Energy Management System

Building Energy Management System

Home Energy Management System

UK EMS MARKET SIZE - £BN (2014 – 22)

Key Observations

▪ By the end of FY 2018, the UK Energy Management Systems market is expected to be worth

£XXbn accounting for c. 15% of the overall European market

▪ UK has traditionally followed other countries like Germany, France, and Denmark, who have

been at the forefront of new EMS technology adoption

▪ Though the legacy systems have been in existence for quite a long time, but recently, connected

devices (IoT, AI) are making inroads in the UK market gradually

▪ Large globally diversified players like Schneider, XX, etc. account for c.XX% of the market and

the remaining market is highly fragmented

• “The market is not very mature. EMS that control energy consumption in a building, those

have been around for a long time but at the same time, many of them were not internet

compatible” – Director, ABC

• “The energy management and metering side, is very crowded and there are a lot of players

out there. So, there are old school players who have been there for 25 years like Siemens

and then again there are lots who operate in the market” - MD, ABC

• “The UK comprises almost 10-15% of the European Market. Germany is the market leader,

Germany and France have about 15-20% each of the market” - Managing Director, ABC

1.50XX

XXXX

XX

XX

XXXX

XX

Industry Speak

CAGR 2014-17 CAGR 2017-22

XX% XX%

XX% XX%

XX% XX%

9% 12%


While industrial customers (manufacturing, engineering, etc.) have been heavy adopters of energy

management solutions, the commercial sector (hospitality, banking, etc.) is catching up

Market Size & Growth Outlook UK Energy Management Systems Market Study

Sources: PwC, TEAM Energy, Wattics, RocSearch Analysis, Primary Interviews

Key Observations

By End Markets:

▪ Industrial customers (manufacturing, engineering, construction) are heavy adopters of EMS; Commercial establishments (Consumer

goods, Hospitality & Leisure, Banking & Capital) are slow adopters; and SMEs will emerge as a major underserved market segment

• 33% industrial firms and 20% commercial organizations plant to invest £1.0mn in smart energy technology in the next 5 years

• Leading companies have announced energy efficiency targets for 2020- P&G will power its plants with 100% renewable energy and

Walmart will reduce building energy intensity by 20% from 2010 levels

▪ Adoption in the residential sector is expected to remain sluggish with a vast majority of respondents unwilling to spend on smart home

systems in next 2 -5 years

By Offerings:

▪ Software and consulting together constitutes XX% of the EMS market

▪ Abundance of data, upgradation of existing solutions, demand for specialized solutions for complex applications are few factors driving the

demand

By Deployment Model:

▪ XX – XX% of the energy management software market consists of on-premise software; availability of in-house IT team and low

infrastructural cost are few factors driving the demand for this deployment model

▪ Cloud based model is gaining traction as it offers easy data accessibility, reduces software development and maintenance cost, and

sensitive data recovery

Industry Speak

▪ “Commercial & Industrial market is growing at about 5-8% p.a., it might grow further if there are some structural shifts in the way the

things are done, particularly with outsourcing, so some of the major clients are beginning to outsource energy management as a service

and that’s making the sector grow” – Technical Director, ABC

▪ “Services would have higher potential to grow, especially the managed services. Managed services would have a higher % share in

future due to Cost-saving mechanism by the companies” – Manager, ABC

XX%

XX%

XX% Software & Related Services

Products/Devices

Consulting

UK EMS MARKET BY OFFERINGS (2017)

100% =

£XXbn

XX%

XX%

On-Premise Hosted

UK ENERGY MANAGEMENT SOFTWARE MARKET BY

DEPLOYMENT MODEL (2017)

100% =

£XXbn

XX%

XX%

XX%

Home EMS

Building EMS

Industrial EMS

UK EMS MARKET BY END MARKETS (2017)

100% =

£XXbn


Table of Contents










▪ Appendix 54-60


Regulatory compliance, incentives for SMEs in select sectors and the proliferation of data across the energy

value chain is driving Utilities and businesses to recognize the value of energy management software

Growth Drivers UK Energy Management Systems Market Study

Sources: European Commission; European Council; The Energyst; Mordar Intelligence; DailyStar; Gov.uk; Primary Interviews

1

2

34

5

Regulatory obligations

▪ The EU Emissions Trading Scheme which aims to reduce

GHG emissions by at least 40% by 2030 and the revised

Energy Efficiency Directive which sets an energy efficiency

target of 32.5% for the EU for 2030 will drive the demand for

BEMS and IEMS

Government support and initiatives

▪ In June 2018 the UK government granted

£8.8mn to SMEs in the hospitality and retail

sectors to help them evaluate technologies

to control energy usage

▪ Roll out of smart meters in the UK by 2020,

will drive demand for energy efficiency

software and servicesProliferation of data across the energy value chain

▪ With abundant data from smart meters and IoT,

Utilities are recognizing the value of energy

management software to meet their peak demand

and efficiency goals

▪ Businesses are moving towards more centralized

energy management solutions with a focus on

automated energy data collection and reporting

CSR and brand equity

▪ Even beyond regulatory mandates, large

organisations are setting sustainability goals

and investing in sustainability management

solutions to meet the requirements of their

investors, customers and suppliers

▪ BAE Systems, BT, Unilever, Walgreens Boots

Alliance, and WPP are some of the leading

examples

Rising energy prices

▪ Businesses are deploying sophisticated EMS to monitor

and control their energy spend and counter the sharp

increase in prices

▪ With Electric Vehicles sales expected pick up by 2020, the

required charging point infrastructure will drive innovation

across energy management devices and software

High

LowImpact on EMS

“Many cities in the UK have said that they’ll stop producing diesel cars by 2050 and there will be

an uptake of electric vehicles, electric charging points” – Operations Director, ABC

“Residential by far will drive the industry. People are more used to giving out their data on Amazon

Alexa and Google Home like their name, age, address, what time they leave the house and when they

enter. People want to make their lives more efficient and bring down costs” – MD, ABC

Industry Speak

Industry Speak


Network hackers destroying critical power infrastructure and abusing smart home devices, and initial high

investment cost are among the major deterrents for the industry

Inhibitors UK Energy Management Systems Market Study

Sources: Wired; ESET; Venture Outsource; Allied Market Research; Ready One; Organization for Economic Co-operation and Development;

2▪ Integration with third-party software vendors such as salesforce.com and IBM’s Cast Iron middleware often has

compatibility issues, requiring separate vendors for maintenance as users cannot update data and linkages

▪ Although EMS vendors carefully script front-end macros, proprietary algorithms and other data-proofing tools, data

integrity continues to be a challenge while integrating with ERP solutions

Interoperability

and Data Integrity

Challenges

High

LowImpact on EMS

▪ High initial set-up cost, along with the long payback period, is one of the major inhibitors of the industry

▪ Traditional deployment of a Building Energy Management System varies between £2 – £6 per square foot and it could

take up to 4 years to recover the initial investment.

▪ There is also a high operational and maintenance cost involved post deployment

1High Initial

Investment Cost

3

▪ The energy efficiency policy and its goals in an organisation are generally defined by its senior management team

▪ Any EMS spend is considered as an operating expense. There is also limited awareness of the latest energy

management solutions

▪ The above factors, coupled with budgetary limitations and extended wait period to realise any return on investment,

often makes the management team disinclined towards making sizeable commitments

Organisational

Barriers

4▪ Increased connectivity among between power generation plants, distribution grids and smart homes also increases

the vulnerability of these networks to cyber threats

▪ In 2015 and 2016, Ukraine’s power grid was attacked by the industrial control systems malware – Industroyer; as a

result of which Ukrainian capital Kiev was hit by a blackout

Cyber Threats


Table of Contents










▪ Appendix 54-60


UK government’s plans to install more smart meters, the EU directive for smart homes and favourable

mortgage terms for green buildings are impacting the entire EMS device and software ecosystem

Market Trends and Their Impact UK Energy Management Systems Market Study

01

02

03

Ambitious smart meter rollout

scheme by the UK government

Increasing number of smart

buildings in the UK and rest of

Europe

Growing popularity of Green

Mortgages for energy efficient

homes

▪ The government plans to install XXmn smart gas and

electricity meters by 2020 with an investment of £XXbn,

to help citizens reduce their energy expenditure

▪ So far, more than 10mn meters have been installed in

the UK

▪ In 2016, the EU proposed revisions to the Energy

Performance of Buildings Directive to ensure buildings

use energy efficiently with the help of information and

communication technology

▪ Between 2014-16, 42 smart building projects were given

a grant of £270mn by the EU commission

▪ Introduction of Clean Growth Strategy by the UK Govt

▪ Less likelihood of default on payment terms of energy

efficient home owners because of higher disposable

incomes

▪ Smart meters are the enabling asset for deploying energy

management software and IT infrastructure

▪ The government push for installing smart meters will drive

demand for energy management services and software that

use smart meter data

▪ Proliferation of energy saving devices ranging from smart

HVAC, smart plugs, smart lightings. Building Automation

System Optimization, etc., deployed

▪ Rise in small size, interoperable hardware

▪ In 2018, 37 EU banks launched pilot scheme with lower

interest rates for energy efficient homes2 . Such homes use

HEMS to monitor and control their energy consumption

▪ Green mortgages could result in the savings of £47bn in the

UK, as demand for energy efficiency technologies and

services increases

Drivers Impact

Sources: Telegraph, Mordar Intelligence, The Guardian, Anesco, Prime Energy, Smartestenergy,Financial Times, Gentrack, Energylivenews, IEEE, Primary Interviews, Climate Action, BusinessGreen, World Green Building Council

1 2 3

▪ “Roll out of smart meters in the UK by 2020 that will enable suppliers to create innovative products rather than just a single standard tariff, moving towards time-based tariffs” – Director, ABC

▪ “Another driver could be the heat control costs and to control costs, you might have energy management systems for building, more active occupancy control systems” – Director, ABC

Note: (1) Clean Growth Strategy sets out Government proposals for decarbonising all sectors of the UK economy through the 2020s (2) A building that has a very high energy performance and requires nearly zero or very low amount of energy

Industry Speak


Table of Contents










▪ Appendix 54-60


The market is consolidated at the top level, with a long tail of mid-to-small diversified and pureplay players.

Diversified players have a c. XX% market share with a few (c. XX) large players having a c. XX% market share

Landscape of EMS Companies in the UK UK Energy Management Systems Market Study

Sources: RocSearch Analysis, Primary Interviews

XX Diversified EMS Companies XX Pureplay EMS Companies

I II III IV

The B2B market with products/ services that can go straight to

the customers’ commercial establishment (e.g. GE and

Siemens) is very consolidated – SMAP, ABC

Certain segments such as smart meters and

metering data services are more crowded,

with a number of regional and global players

operating in this segment – Managing

Director, ABC

I. GLOBAL LEADERS II. DIVERSIFIED MID TO SMALL SIZE III. PUREPLAY COMPANIES WITH GLOBAL REACH IV. REGIONAL PUREPLAY COMPANIES

GEOGRAPHIC REACH Global Global and Regional Global Regional

BUSINESS FOCUS Diversified Diversified Pureplay Pureplay

NUMBER OF COMPANIES c. XX c. XX c. XX c. 120

MARKET SHARE c. XX% c. XX% c. XX% c. 20%

TYPES OF PLAYERS Schneider, Honeywell, ABC BPP Technical Services, ABC Generis Technology, ABC STC Energy Management, ABC

Re

ve

nu

e (

No

t T

o S

ca

le)

£0bn

£0.5bn

£90bn

Note: Diversified players include global tech giants like IBM and Cisco, professional service leaders like Booz, BCG and Deloitte. While the total revenue of these firms is high, their overall focus on energy management related products and services is limited


The market is headed towards consolidation with EMS companies and Utilities, scouting for targets to

enhance their service capability and acquire an established customer base

Trends Shaping the Competitive Landscape UK Energy Management Systems Market Study

Sources: RocSearch Analysis, Primary Research Discussions with ABC

01Market is heading from many

niche companies, to having a

few end-to-end solution

providers

▪ EMS market in the UK used to be fragmented with a number of specialised players. With multiple stakeholders scouting for

targets, the market is moving towards consolidation

▪ As companies look to become end-to-end solution providers, the market is expected to become more challenging for small

independent EMS companies

▪ Lack of technological differentiation and long sales cycle is also leading smaller players to lose out to established players

02Competition to acquire new

customers is driving large

diversified players to acquire

▪ The move towards consolidation isn’t necessarily about one software company acquiring another, it also includes service

companies trying to acquire energy management software providers

▪ Energy procurement and professional services firm, Inspired Energy, has done 10 acquisitions in the last 6 years, some of

which were more from a customer acquisition perspective than for capability augmentation

▪ XXX, considers any company in this sector with revenue more than €10mn and a stable growth rate as a target. Within

each niche, they focus on buying the top 3 players and then integrating their clients with XXX.

03Utilities are developing energy

management software

capability through acquisitions

and partnerships

▪ Utility companies have been scouting for energy management software companies for a few years now. Npower, XXX

have all either acquired or patterned with a software company in the last 5 years

▪ Utilities also want to be exclusive. They want their partners to work with them only and at times end up investing in these

small companies.

▪ If an energy management software company approaches a Utility to sell their product, the Utility may reject it because their

competitor is an investor or a partner of that company

“I’m starting to see a trend of consolidation now. Before it was fragmented where you had specialists in certain areas but now you have the big players, the consultancies, traditional EMS and

Utilities” – Consulting Director, ABC

Industry Speak


Collaborating for next generation product development, securing favourable contract terms or investments

from large Utility clients, all the while ensuring healthy margins can help EMS companies scale-up fast

Key Success Factors for an EMS company UK Energy Management Systems Market Study

Sources: RocSearch Analysis, Primary Interviews

▪ Typical sales cycles for companies selling to Utilities is between 6-

12 months. Several small & mid-sized EMS companies in the UK

are struggling to make profits

▪ EBITDA Margin is therefore a key financial benchmark for any

EMS company in the UK

▪ Types of customers, contract length and contract renewal are key

success determinants for energy management software company

▪ Business partnerships and collaboration for product innovation is

critical for successfully scaling-up an EMS company

▪ Getting products/services to the end consumers through the

right channels (B2B, B2B2C) is paramount for the business

▪ In case of the B2B channel, EMS companies who are able to

secure R&D partnerships or investment from the Utility, they

are catering to, will scale-up faster

▪ EMS companies must continually invest in innovative

products, as customers are moving away from traditional

solutions

▪ Customers expect next generation offerings that include – AI,

advanced analytics, cloud solutions, etc.

▪ Companies are incurring high cost to capture huge

amounts of energy usage data

▪ This data is largely under utilised, as many EMS

companies provide only basic analysis and stop

short of deploying tools for much wider insights

1

2

3

4

5

“Dozens of companies in the UK are still struggling to be

profitable. The financial performance of the company is the major

KPI in this sector” –Solutions Director, ABC

“Majority of the new entrants (small players) fall in the

B2B2C group where they are trying better

communicating with the customers (engaging the

customers)”– Co-founder, ABC

“The customers are moving from 1st generation products to

the new generation products (evolved overtime, AI, modern

analytics, Cloud-based, compatible with different

equipment). In the UK market, some players are still doing

what they did a few years ago, not changing with times”–

Director, ABC

“Utilities are most receptive to offers (products/ service) that can

be utilized for their internal use and for their end customers as

well (ability to upsell)” – Co-founder, ABC


Table of Contents




▪ Growth Drivers & Inhibitors 14-16




▪ Mergers and Acquisition 32-37


▪ Appendix 54-60


Players seeking product innovation and market share are driving consolidation in the UK EMS market; deal

activity is being driven by large diversified players, Utilities and PE/ VC firms

M&A Landscape UK Energy Management Systems Market Study

Sources: Greentech Media, alertme, Oracle, Fusion Corporate Partners, RocSearch Analysis, Primary Interviews

M&A

Landscape

I. Market Moving Towards Consolidation

▪ A number of factors including: presence of a large number of niche

players; move towards end-to-end solution capability; product capability

augmentation and/ or customer acquisition; have all contributed to

creating an active M&A market

II. Private Investment in the EMS Sector

▪ Close to XX pureplay companies received private capital investment in the

last one decade (2007 to 2017). While a number of these investments

were made by VC firms, PEs (lower mid-market and mid-market focussed)

such as LDC Managers, Alinda Capital, ABC, have also been active

III. Large Diversified EMS Players as Aggressive Buyers

▪ Players like Inspired Energy and Honeywell have been acquiring for both

capability augmentation and customer acquisition

IV. Utilities Pursuing Capability Augmentation

▪ Utilities have been scouting for companies for a few years now. Npower,

ABC have acquired or invested in an energy management software

company in the last 5 years

V. Other M&A/ Investment Trends in the UK and the US

▪ Lately, investments from the US, China, New Zealand, and Germany have

poured in the UK energy management sector

▪ In the US, tech giants Google and Oracle are acquiring energy software

companies. Technology maturity, stagnant revenue and building customer

centric business are driving this trend

1 2 3 4 5

Case 1: Private Investment in the EMS Sector

▪ Alinda Capital Partners, the US-based PE house acquired Energy Assets Group, the UK based and listed gas

metering company in 2016 for £285mn

▪ Alinda Capital Partners considered it an attractive opportunity and Energy Asset was well positioned to provide

both diversification and growth potential

Case 2: Large Diversified EMS Players as Aggressive Buyers

▪ Between 2012 and 2018, Inspired Energy an energy procurement and energy management company acquired 10

EMS companies in the UK

▪ Inspired Energy’s targets include energy procurement consultants, energy consultancy for Utilities, online

electricity and gas price comparison platforms, billing software and energy management software companies

Case 3: Utilities Pursuing Capability Augmentation

▪ British Gas, supplier of energy in the UK, acquired AlertMe, a developer of platforms for running various domestic

“smart” devices, in 2015 for £65mn

▪ The acquisition created a win-win situation for both the parties - AlertMe got access to the huge customer base of

British Gas while British Gas was able to offer IoT (connected home) complimentary services to its consumers

Case 4: M&A Trends in Other Developed Markets

▪ In the US, Oracle acquired Opower, a cloud-based energy software company, in 2016 for £366mn

▪ Opower cloud energy software has complimented Oracle’s existing business, which now has better control over

the entire value chain of the business - from power generation plants to consumers


Since 2015, the UK energy-management software market is heading towards gradual consolidation where the

majority of acquisitions are initiated by the software/analytics companies

M&A Landscape UK Energy Management Systems Market Study

Sources: MergerMarket, RocSearch Analysis, Primary Interviews

Energy Management

Software/ Analytics/

Consulting

2011 2012 2013 2014 2015 2016 2017 2018

Bid

de

r In

du

str

y

Software Target

EDW + TEAM

Bidder + Target

Private Equity

Inspired Energy + FEM

Inspired Energy + HEG

Octopus Investments +

Reactive Technologies

Alinda Capital Partners +

Energy Assets

Inspired Energy + STC

Energy

Accenture + EnergyQuote

Utilitywise + t-mac

Technologies

Amadeus Capital +

Cambridge Clean Energy

Inprova Group + UES

Energy

Ameresco +

Energyexcel

NorthEdge Capital +

Utiligroup

Scottish Equity Partners +

Anesco

Intermediate Capital +

Inenco

Ameresco + Energy

Services Partnership

Alpina Capital Partners

+ Wireless Energy

Management

Enterprise Ventures/PHD

Equity Partners + Vickers

Electronics

CBPE Capital + Anesco

Gentrack Group +

Evolve Analytics

Inspired Energy +

SystemsLink 2000

LDC (Managers) +

ENSEK

Energy Services Group +

Utiligroup

Gentrack Group + Junifer

Systems

Smart Metering Systems

+ Trojan Utilities

Business-intelligence of

Oriental Nations Corp +

Cotopaxi

LDC (Managers) +

Stroma

Legend

August Equity + Zenergi

Morrison Data Services +

Meter-U Ltd

First Reserve + Morrison

Data Services

Anthesis Consulting

Group + Sustain

Grovepoint Capital /

Rubicon Partners +

Enserve Group

Smart Metering Systems

+ Utility Partnership Ltd

RCapital Partners + Four

Seasons Group

The Energy Solutions

Group + Evolve Energy

Inspired Energy +Direct

Energy Purchasing

MITIE Group +Utilyx Ltd

Note: (1) Kinect Energy Group was previously known as Orchard Energy

1 2 3 4 5

Utility

British Gas + AlertMeWorld Fuel Services

Europe + Kinect Energy

Group1

RWE npower + RUMMSSE Plc + Energy

Solutions Group

Non-Utility Lakehouse + Orchard

Energy

Lloyd's Register + Senergy

Ltd

Balfour Beatty WorkPlace +

Ecova


Private Equity firms and Utility companies concluded the maximum number of deals with revenue multiple

greater than 4.0x

Comparable Transactions: Revenue Multiple UK Energy Management Systems Market Study

COMPARABLE TRANSACTIONS: REVENUE MULTIPLE

6.3x

0.8x

4.3x

1.8x

1.0x

3.2x

0.4x

6.1x

0.8x1.3x

2.1x

6.3x

4.3x

1.4x

2.0x2.6x

TARGETEnergy Assets

GroupAnesco Inenco Group Enserve Group Four Seasons

STC

EnergyCotopaxi

t-mac

TechnologiesEnergyexcel

Utility

PartnershipUtilyx RUMM AlertMe.com

The Energy

Solutions

Group

Orchard (Holdings)

UKPower Efficiency

AcquirerAlinda

Capital

Scottish

Equity

Partners;

Hermes GPE

Intermediate

Capital Group;

Vitruvian

Partners

Grovepoint

Capital;

Rubicon

Partners

RCapital

Partners

Inspired

Energy

Business-

intelligence of

Oriental Nations

Utilitywise Ameresco

Smart

Metering

Systems

MITIE Group RWE npower British Gas SSE LakehouseBalfour Beatty

WorkPlace

%

Acquired100% 40% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 79% 100% 100% 100%

Deal

Value285.0 17.0 140.0 41.0 30.0 12.0 18.0 22.0 5.0 14.0 14.0 8.0 56.0 66.0 10.0 18.0

EV 285.1 42.5 140.0 41.4 30.1 12.0 18.1 22.0 5.4 14.0 14.0 8.0 65.0 66.0 10.0 18.7

Revenue 45.3 55.1 32.3 22.6 30.0 3.8 47.9 3.6 6.4 11.1 6.6 1.3 15.0 45.8 5.0 7.2

Date 4/2016 9/2013 7/2013 1/2016 11/2013 11/2015 5/2015 4/2015 8/2014 4/2014 1/2012 4/2015 2/2015 7/2014 7/2015 4/2011

Median: 2.1x

Bidder

Industry

Sources: MergerMarket, RocSearch Analysis

1 2 3 4 5

Private Equity Energy Software/Analytics Utility Non-Utility


The EBITDA multiple for majority of the deals between 2011-15 was less than or approximate equal to the

industry median 12.6x

Comparable Transactions: EBITDA Multiple UK Energy Management Systems Market Study

COMPARABLE TRANSACTIONS: EBITDA MULTIPLE

12.7x 12.0x 9.9x

25.9x

12.5x

73.3x

5.3x

7.8x

31.0x

38.9x

9.7x14.8x

10.9x

20.9x

Median: 12.6x

Bidder

Industry

Sources: MergerMarket, RocSearch Analysis

1 2 3 4 5

TARGETEnergy Assets

GroupAnesco Inenco Group Enserve Group Four Seasons

STC

EnergyCotopaxi

t-mac

TechnologiesEnergyexcel

Utility

PartnershipUtilyx RUMM AlertMe.com

The Energy

Solutions

Group

Orchard (Holdings)

UKPower Efficiency

AcquirerAlinda

Capital

Scottish

Equity

Partners;

Hermes GPE

Intermediate

Capital Group;

Vitruvian

Partners

Grovepoint

Capital;

Rubicon

Partners

RCapital

Partners

Inspired

Energy

Business-

intelligence of

Oriental Nations

Utilitywise Ameresco

Smart

Metering

Systems

MITIE Group RWE npower British Gas SSE LakehouseBalfour Beatty

WorkPlace

%

Acquired100% 40% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 79% 100% 100% 100%

Deal

Value285.0 17.0 140.0 41.0 30.0 12.0 18.0 22.0 5.0 14.0 14.0 8.0 56.0 66.0 10.0 18.0

EV 285.1 42.5 140.0 41.4 30.1 12.0 18.1 22.0 5.4 14.0 14.0 8.0 65.0 66.0 10.0 18.7

EBITDA 22.5 3.5 14.1 1.6 - 1.0 - 0.3 1.0 1.8 0.5 0.2 6.7 4.5 0.9 0.9

Date 4/2016 9/2013 7/2013 1/2016 11/2013 11/2015 5/2015 4/2015 8/2014 4/2014 1/2012 4/2015 2/2015 7/2014 7/2015 4/2011

Private Equity Energy Software/Analytics Utility Non-Utility


Table of Contents










▪ Appendix 54-60


XXX: Platform Target Profile UK Energy Management Systems Market Study

BUSINESS

DESCRIPTION

Offers energy data collection reporting and data analytics

services

PRODUCTS &

SERVICES

Energy Data Services, Broad Reporting, Advanced Data

Analysis, Invoice Management, Training and Webinars,

Monitoring and Targeting, Query Management, Supply Capacity

Reset, Compliance Solutions, Multi-Site Project Management

GEOGRAPHIC

PRESENCEUnited Kingdom and United States

END MARKETSRetail, Property, Construction, Renewable Energy, Government

& NGOs, Energy & Utilities, Education

OWNERSHIP▪ Family owned. Owned by XXX and family

▪ XXX is the Managing Director

INVESTMENT RATIONALE

▪ Family Owned BusinessXXX is a closely held, family owned

business with XXX as its Chairman and

XXX as its MD

▪ Vintage Company with Large

ClienteleOver 3-decades of experience in energy

data software and services. 1,200+

clients across retail, commercial,

industrial, utilities and the hard to enter

government and public sector market

▪ Fast Growing Top and Bottom

LineIn the 3-years from 2015 to 2017, its

revenue grew by more than XX% and its

EBITDA grew by more than 30%

▪ Growing MarginsFrom 2015 to 2017 its EBITDA Margin

grew from 18.1% to 22.5%

▪ Business ExpansionIn August last year, XXX opened a new

40 people office in Blackpool

REVENUE (£MN) & EBITDA MARGIN (%)

RECENT DEVELOPMENTS

MANAGEMENT

NAME DESIGNATION DoJ EMAIL

ABC Managing Director 2011 [email protected]

ABCFinance and Commercial

Director 2014 [email protected]

ABC Operations Director 2016 [email protected]

ABC Head of Product 2017 [email protected]

XX XXXX

XX

20.6%

XX

2015 2016 2017

▪ 26 Jul 2018 – XXX approved on ABC: XXX has been

approved to supply their services– across multiple utilities

through the latest iteration of the UK government’s Crown

Commercial Services ‘RM3800 Utilities Management

Software, Metering and Ancillary Services Framework

Agreement

▪ 27 Nov 2017 – XXX at EMEX 2017: XXX participated in

EMEX 2017 (The Energy Management Exhibition) and

introduced XXX ID, an energy analytics platform

▪ 7 Aug 2017 – XXX opens new office: XXX opened a new

office in Blackpool, consisting of 40 employees

Name XXX DoI 1981 Employees 135 Address Sentinel House, XXX Website www.XXX.com

Sources: XXX Company Website, Secondary Research, RocSearch Analysis

mailto:ABC@

mailto:ABC@

mailto:ABC@

mailto:ABC@

http://www.stark.co.uk/


XXX: Bolt-On Opportunities UK Energy Management Systems Market Study

Sources: Resource Data Management Group Website, Bolt-On Company Websites, RocSearch Analysis, Proprietary Databases

Bolt-On Opportunities for XXX Across Various Growth Strategies

PRODUCT DEVELOPMENT

Note 1: Existing Markets of XXX: Construction and Building, Education, Healthcare, RetailNote 2: Existing Product/ Services of XXX: Alarm Monitoring, Bill Validation, Building Performance Monitoring and Control, Carbon Management, Energy Analysis and Dashboarding, Energy Optimisation, Maintenance and Support Services, Outage

Management, Predictive Maintenance, Refrigeration Monitoring and Reporting, Risk Management

Note 3: The above mapping of the bolt-on company’s products/ services and end markets is based on a subjective assessment of the platform company and bolt-on company’s offerings and end markets

NEW

PRODUCT

NEW

MARKET

Bolt-On Target Legend:

Target NameTarget Revenue | Target EBITDA

Company x

£6.7mn | £0.1mn

Company x

£28.5mn | £0.01mn

Company x

£33.1mn | £0.6mn

Company x

£4.2mn | £0.2mn

Company x

£6.8mn | £0.01mn

MARKET DEVELOPMENT

Company x

£1.5mn | £0.5mn

Company x

£1.3mn | £0.5mn

Company x

£1.8mn | £0.04mn

MARKET PENETRATION

Company x

£3.8mn | £0.7mn

Company x

£12.6mn | £0.4mn

Company x

£7.5mn | £0.7mn

DIVERSIFICATION

Company x

Company x

£5.7mn | £0.2mn

Company x £9.4mn | £0.4mn

Company x

£15.6mn | £0.7mn

Company x

£8.1mn | £0.6mn

£3.2mn | £0.2mn

Company x

£4.1mn | £0.3mn

Company x

£2.3mn | £0.2mn

Company x

£2.2mn | £0.8mn

Company x

£0.5mn | £0.3mn

Energen Ltd.

£0.1mn | NA

Company x

£1.1mn | £0.4mn

Company x

£0.2mn | NA

Company x

£3.1mn | £0.4mn

EXISTING

PRODUCT

EXISTING

MARKET


Table of Contents










▪ Appendix 54-60


Appendix – Expert Details and Interview Excerpts (1/5) UK Energy Management Systems Market Study

Participant Designation Organisation Quotes

Participant 1 Manager - Operations ABC

▪ Inhibitors – “Data Security challenges; General Data Protection Regulation (GDPR) has a major role to play”

▪ Market Overview – “Services should have higher potential to grow, especially the managed services. Managed services should have a higher percentage

share in future due to adoption of cost-saving mechanisms by the companies”

▪ Deployment Model – “Currently on-premise is getting adopted more often, so should be having the largest market size; in future, cloud should have higher

deployment”

Participant 2Manager – Business

DevelopmentABC

▪ Inhibitors – “Lack of integration with legacy infrastructures” and “Data Security concerns, especially in the machine-to-machine (M2M) ecosystem”

▪ Growth Rate – “CAGR should be in the range of XX%”

▪ Deployment Model – “On-premise -largest market size, cloud- higher deployment and On-premise should have 60-65% of share”

Participant 3 Director ABC

▪ Growth Rate – “CAGR should be more than XX%”

▪ Growth Driver – “Regulation and polices towards EMS in Europe, such as directives of the European Parliament, set the minimum energy performance

requirements of new and existing buildings, mandate the requirements of energy performance certification, and inspection of medium- and large-sized heating

and air-conditioning systems at regular intervals”

▪ Industry Vertical – “Power & Energy, Office & Commercial Buildings verticals have more than XX% market share”

Participant 4 C-Level Executive ABC

▪ Market Size – “The UK’s market size is likely to be between USD XX and XX billion in the current scenario”

▪ Inhibitors – “EMS technology requires huge initial investments to set up the field-level devices, replace aging infrastructure, arrange for transmission network

between the customers, and manage integration of new and existing systems on-site. Such high investments could lead to an additional economic burden on

the local and national government bodies. High operational and maintenance costs following the deployment are also a huge concern for the utility providers”

▪ Industry Vertical – “Market should witness more activity in Power & Energy, Office & Commercial Buildings verticals for the next five years”

1 2 3 4 5


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