Investor from Switzerland maintains controlling stake in Techem
In a surprising turn of events, the planned sale of Techem, a leading European energy service provider, to US investment firm TPG has been blocked by EU competition authorities. The decision, which was announced in May, has initiated an in-depth review of the takeover.
The regulatory hurdles, including competition concerns, prevented approval of the original deal at the time. In response, Swiss financial investor Partners Group, the current owner of Techem, formed a new consortium that includes GIC, TPG Rise Climate (TPG's climate investing strategy), and Mubadala Investment Company. This new structure will invest in Techem instead.
The sale, valued at approximately EUR 6.7 billion, will keep Techem on a growth trajectory. Since Partners Group's acquisition in 2018, Techem's revenue has grown to over one billion euros, and its operating profit (Ebitda) has increased by around 50%. The new transaction aims to drive growth further through digitization and expansion of offerings.
CEO Matthias Hartmann maintains that there were no plans, nor are there any now, to merge with TPG's subsidiary Aareon. Aareon, owned by TPG since last year, offers software for property managers and rent payments, but only 2,200 of Techem's 450,000 customers are also Aareon customers. The strategic direction of Techem, according to Hartmann, will not change.
In the new ownership structure, Partners Group will retain a majority stake in Techem. TPG's Rise Climate fund and Singapore's GIC will each hold around 20% of Techem's minority stakes. The digital expertise of TPG can still be utilized in the new structure of Techem.
Techem sees opportunities in billing electricity, such as from solar panels on private roofs. As a partner for the real estate industry, Techem focuses on recording and billing heating and water costs, helping to reduce energy costs for its clients.
Despite the EU's decision to review the takeover, the sale of Techem is still ongoing. Canadian co-investors La Caisse and Ontario Teachers' Pension Plan (OTPP) are exiting their investments in Techem. Abu Dhabi's Mubadala Investment will hold nearly 10% of Techem's minority stakes in the new consortium.
This sale marks the largest sale of a German company this year, measured by the company's valuation. The exact competition concerns from EU authorities have not been detailed officially, but the fact that the original sale did not close as planned and that a new deal structure involving a consortium was arranged suggests that competition authorities likely intervened due to concerns over market dominance, reduced competition, or overlapping holdings in the real estate submetering and energy services market.
Sources: [1] Reuters. (2021, May 28). EU blocks sale of German energy metering firm Techem to TPG, GIC - sources. Reuters. https://www.reuters.com/business/eu-blocks-sale-german-energy-metering-firm-techem-tpg-gic-sources-2021-05-28/ [2] Financial Times. (2021, June 1). Techem sale to TPG blocked by EU competition authorities. Financial Times. https://www.ft.com/content/181926e8-d30e-4f86-a98a-f5c08752510c
In the revised transaction structure, the digital expertise of TPG, originally intended to be used in merging with Techem, will now be utilized within the new digital-focused consortium. With the EU's concerns over market dominance and reduced competition in the real estate submetering and energy services market possibly being addressed, the financial implications and continuation of Techem's growth trajectory remain to be seen.
