By Karen Peattie
SCOTTISH energy services group Smart Metering Systems has conditionally sold a minority of its meter assets to funds managed by Equitix Investment Management for £291 million.
The Glasgow-based company, which employs over 1,200 people and operates out 12 locations across the UK, supports the installation and management of metering assets.
Alan Foy, chief executive, said the disposal will “enable us to enhance greatly shareholder value with significant and sustainable increase in dividends – underpinned by our asset-backed, inflation-linked, recurring revenue stream”.
“This transaction realises considerable cash returns and demonstrates the substantial value of our smart meter portfolio,” said Mr Foy.
“With a strengthened balance sheet, we will also be in a much stronger position to invest in the sizeable UK smart meter rollout programme, which is central to the establishment of a decentralised and decarbonised energy system.”
SMS said the move would allow existing debt to be fully repaid, with a new revolving credit facility of £300m on the same terms.
Following the deduction of transaction and other expenses, and subject to completion, the group expects to receive net cash consideration of £282m from the sale of the entire issued share capital of Crail Meters, a wholly owned portfolio or SMS.
In 2009, the UK Government announced plans to update Britain’s metering system with aims to have a smart meter installed in every home by 2020 through a supplier-led rollout. This was later updated to every household being offered a smart meter by 2020, and was then extended to 2024.
SMS said the extension of the smart meter rollout target “provided energy suppliers with greater timing flexibility than before, and SMS expects the installation profile to be more evenly spread through until the end of 2024.”
SMS, marking its 25th anniversary in 2020, said in a year-end trading update in January that its 2019 financial performance was in line with market expectations.
The group’s continued investment throughout the year saw the number of metering and data assets under management increase by approximately 19 per cent to 3.7 million by December 31, 2019, up from 3.1 million the previous year.
Its smart meter portfolio grew 44%, breaking through the one million mark.
Achal Bhuwania, deputy chief investment officer at Equitix, said: “This acquisition aligns with our business objectives of investing in the country’s sustainable energy transition initiatives, which we are excited to be part of.”
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