Australia's PEP secures fourth exit in a fortnight

Winconnect, a provider of utility services to multi-tenanted buildings, will be sold to Origin Energy, while Brookfield Asset Management is taking a stake in smart meters unit Intellihub. Both companies are held by PEP’s Secure Assets Fund, which targets companies that generate annuity income but also offer opportunities for traditional PE-style operational improvement.

The two earlier exits involve buyout investments from PEP’s fifth flagship fund. Australia-based medical devices distributor LifeHealthcare will go to Ebos Group and New Zealand corporate hospital platform Evolution Healthcare is being acquired by QIC and Sunsuper.

Winconnect specializes in last-mile network infrastructure for residential and commercial buildings. It is responsible for a portfolio of more than 300 sites and 60,000 connection points, managing hot water and electricity meters, hot water plants and equipment, electric vehicle charging stations, and embedded solar generation infrastructure under long-term contracts.

PEP bought the business – which claims to be the largest independently owned private energy network provider in Australia – in 2020.

Origin said in a filing that Winconnect would boost its community energy services (CES) offering, adding 87,000 electricity and serviced hot water customers to its network, plus a pipeline of 36,000 contracted apartments. On completion, the company will have 367,000 CES customers nationwide.

As part of the transaction, Origin’s master services agreement with Intellihub has been amended, allowing for an increase in meter volumes. In addition, Origin and Winconnect will sell their electricity embedded network meters to Intellihub. The A$42.4 million ($30.6 million) Origin will pay for Winconnect takes into account these supplementary deals.

Intellihub was created in 2018 through the carve-out of Origin’s Acumen smart meters unit by PEP and Landis+Gyr. The latter contributed A$75 million in the form of cash and its metering services subsidiary. The deal was worth A$267 million, but the buyers also secured A$500 million in debt funding to support a nationwide smart meter rollout. Origin remained a customer.

The company is the only independent multi-utility metering platform in Australia and New Zealand. It works with more than 30 leading utility retailers, serving over one million meters. An additional 1.7 million deployments are in the pipeline.

In November, Intellihub secured a A$1.45 billion five-year financing facility to drive further growth. It was the first green loan globally to be recognized under the Climate Bonds Initiative’s electrical grids and storage certification. Annual reports must be made demonstrating that the proceeds are being used to provide products and services with climate integrity.

Brookfield is taking out Landis+Gyr and part of PEP’s position, turning Intellihub into a 50-50 joint venture with PEP. The deal is reportedly worth around A$1 billion.

“Smart meters are playing a crucial role in the rapid digitization and decarbonization of energy markets. Record levels of rooftop solar and predicted increases in batteries, load control, electric vehicles and other behind-the-meter services are driving significant demand for smart metering and data solutions,” Wes Ballantine, CEO of Intellihub, said in a statement.

“As a result, Intellihub is well-positioned to play a key role in Australia and New Zealand’s energy transition over coming years.”

Intellihub was the debut investment from PEP’s Secure Assets Fund, which closed in 2020 with A$360 million in core equity and A$300 million in committed co-investment capital. The private equity firm closed its sixth buyout fund on A$2.5 billion – up from A$2.1 billion in the previous vintage – earlier the same year.

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• Topics
• Australasia
• Infrastructure
• Trade sale
• Expansion
• Australia
• Pacific Equity Partners
• Brookfield Asset Management
• energy
• Growth capital