Cheung Kong Property, the real estate business owned by Asian billionaire Li Ka-shing, has agreed to acquire German energy metering company ista from CVC Capital Partners for up to €4.5 billion. The company’s ownership will be split between CKP and CK Infrastructure via a joint venture. CVC has been invested in ista since 2003 and acquired the company outright from Charterhouse in 2013.
The deal comes at an interesting time for investments in Europe’s energy services sector. Completed M&A deals in energy services on the continent have fallen dramatically since 2015, the year oil prices began plummeting, eventually dropping to under $30 a barrel in January 2016.
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Completed M&A deals for European energy services companies
By contrast, PE investments in the sector have kept a steady flow over the past few years, even increasing slightly in 2016.
Completed PE deals for European energy services companies
The divergence in deal trends comes at a delicate time for energy services. Companies are still recovering somewhat from the commodity price crashes of 2015, while on the regulatory side, governments are implementing more directives to ensure a move towards clean, efficient energy. This is particularly acute in Europe, with the EU's 2020 targets including directives for member states to increase energy efficiency by 20%, ensure a fifth of all energy comes from renewables and ensure greenhouse gas emissions are 20% lower than they were in 1990.
This has created an opportunity for private equity players. As companies are forced to focus on the bottom line and consolidation after market turbulence, PE buyers have been able to move into distribution and technology aspects of the sector. Deals so far this year include EQT's acquisition of telecoms and energy transmission company Delta Comfort for €488 million along with the takeover of SaaS energy specialist Utiligroup by ESG, an Accel-KKR portfolio company, for a reported £100 million.
Article by Sean Lightbown, PitchBook