13 December 2018

Mergermarket reports: Europe Energy could eye electricity and gas energy acquisitions

Europe Energy, an Italian electricity energy and gas trader and distributor, could consider acquisitions to increase its client base, CEO Manlio Costantini said.
The company would look at Italian targets active in the energy segment with a well-established portfolio of clients, he said, adding that management currently has an opportunistic approach on M&A.
Desirable takeover candidates could be similar to Edlo Energy, an Italian producer and seller of electricity and gas that Europe Energy acquired in October for an undisclosed amount, he said, adding that it could look at firms generating around EUR 40m-EUR 45m in revenue.
The firm intends to grow its presence in Europe so it could eye acquisitions as market entries, he said, adding that depending on the geography, it will evaluate whether to open its branches from scratch or to acquire local firms. Costantini would not name specific countries it is looking at.
Beyond Italy, Europe Energy is currently active in Croatia, Slovenia, Romania and Serbia, according to a company profile.
Europe Energy just approved its 2019-2021 business plan with a view to becoming more of “a smart European multi-utility company”, he said. This provides organic growth along four pillars: expansion of its portfolio, review of its distribution strategies with the opening of 150 new shops, digitalisation of its services and international expansion, the CEO said.
The group generated 2017 combined revenue of EUR 356m in 2017 and expects to reach a EUR 500m turnover by 2020-2021, Costantini said. In Italy, the most similar private competitor is Optima Italia, he added.
Europe Energy intends to back its growth with a 40/60 mix of internal cash resources and bank loans, and it is currently talking to banks to negotiate its future financing, he said, without naming them.
Meanwhile, management has also started evaluating a stock exchange listing, as reported by the ECM service in a separate story. Europe Energy joined Elite, a three-phase programme powered by the Italian Stock Exchange to help firms structure their expansion plans, last month. To access the programme, companies must have a solid growth project, a minimum turnover of EUR 10m, an annual growth of minimum 5% and be profitable, according to Elite’s website.
Alternatively, by the end of its business plan, it could explore a stake sale to private equity investors, should it need fresh funds to fuel its expansion, he said, adding that the owner has not yet decided how much it could look to raise at this stage.
The company was advised by 3H Partners for its business plan drafting, and the consultant is also guiding the firm it through its equity sales options, he said.
Europe Energy is fully owned by its chairman and founder Matteo Ballarin, through his Europe Energy Holding company, the CEO said. He would not provide its enterprise value but said that sector multiples for pure utility firms are in a 5x-8x EBITDA range, while diversified multi-utilities see even higher valuations.
Europe Energy will look more closely at the listing option in the last two years of its business plan, especially if it needs of fresh funds to accelerate its expansion, Costantini said.
Established in 2007, Europe Energy is an international group active in the electricity and gas market and specialising in trading, consultancy and direct sales to final users.

Europe Energy considers stock exchange listing by 2020-2021

The company, which aims to expand further in Europe through a mix of potential acquisitions and greenfield investments, could consider floating its share on either the Italian Stock Exchange or other EU exchanges, for instance in London or Frankfurt, he said.
Europe Energy is currently advised by 3H Partners, that helped the group structure its 2019-2021 business plan and is also supporting Europe Energy in evaluating its equity sales options, the CEO said.
The firm does not have direct listed comparables in Italy, as national multi-utilities such as Hera [BIT: HER] or Iren [BIT: IRE] do not have the same cross-sector specialisation, he said, adding that Europe Energy is active also in the telco and IT segments. More similar listed peers ought to be sought in the US or UK markets, he said, declining to name them. In Italy, the most similar private operator is Optima Italia, he added.
Europe Energy is fully owned by its Chairman Matteo Ballarin, through his Europe Energy Holding company, the CEO said. He would not provide its enterprise value, but said that sector multiples for pure utility firms are in a 5x-8x EBITDA range, while diversified multi-utilities see even higher valuations.
Europe Energy just approved its three-year-plan with a view to becoming “a smart European multi-utility company,” he said. This provides organic growth along four pillars: expansion of its portfolio offering, review of its distribution strategies with the opening of 150 new shops, digitisation of its services and international expansion, the CEO said.
Europe Energy joined Elite, a three-phase programme powered by the Italian Stock Exchange to help firms structure their expansion plans, last month. To access the programme, companies must have a solid growth project, a minimum turnover of EUR 10m, an annual growth of a 5% minimum, and be profitable, according to Elite’s website.
Established in 2007, Europe Energy is an international group active in the electricity and gas market and specialising in trading, consultancy and direct sales to final users.

by Valentina Caiazzo in Milan
from Mergermarket