Among the provisions of newly minted legislation designed to fight climate change are billions of dollars in subsidies allocated for electric vehicle factories. Also included are tax credits for both U.S. produced battery cells and U.S produced battery modules.
At the same time, the legislation allocates some $60 billion do help create domestic jobs making solar panels, wind turbines and other elements of a clean energy future. Those investments will lead to even more demand for makers of batteries to store all that intermittent power.
In the new taxonomy of 568 sub-sectors unveiled earlier this year by SPS by Bain & Co., Energy Storage and Management – the subsector consisting of transactions in the battery storage segment – has been a fairly quiet one. Over the last eight years or so, equity sponsors have acquired about 35 Energy Storage and Management platform companies in North America.
We thought it would be interesting to dive into the profiles of those 35, given the expected rush of deals in this market over the next several months. Here’s what we found:
- No one’s been trying to corner the market so far. Only two buyout firms have done at least two platform deals in this sub-sector—energy specialists LS Power Partners and Vision Ridge Partners.
- Among the most prolific investment banks in the sector, Harris Williams played an intermediary role on three of the 35 deals, Greentech Capital Advisors Securities on two, and Lincoln International on two.
- The deal values lean toward the smaller end of the market. Fifteen of the 35 deals fall in the $10 million to $49 million deal value range, another 12 fall in the $50 million to $249 million range, and just two eclipse $1 billion in deal value.
- Sponsors by and large still hold on to these companies, with 27 of the 35 marked as active portfolio companies and one marked as partially exited.
Are you interested in taking a flyer on one of these companies? A few of the more interesting still-active ones that struck our eye:
- Flatiron Energy: Acquired by Hull Street Energy this summer, the company builds and operates enormous battery storage facilities. According to the Hull Street Energy Web site, “Flatiron’s mission is to reduce harmful emissions that contribute to climate change and environmental injustice through the development of energy storage projects that replace fossil fuel power plans…”
- EVgo Services: Acquired from Vision Ridge Partners by LS Power Partners in January 2020, the company operates a charging network for electric cars across 34 states. The company listed on the Nasdaq via a merger with Climate Change Crisis Real Impact I Acquisition Corporation in July 2021.
- Johnson Controls: Acquired by Brookfield Asset Management and Caisse de dépôt et placement du Québec in March 2019 for $13.2 billion, this company manufactures batteries for hybrid and electric vehicles.