Nobody would dare to accuse the brains trust of PSG Private Equity of being anything but totally switched on. Some of the biggest business ideas seen in South Africa over the last decade have been nurtured by this Stellenbosch-based investment incubator – most notably Capitec Bank and fast growing private education venture Curro Holdings.
PSG’s decision some years ago to snatch a strategic stake in small Bellville-based energy savings specialist Energy Partners certainly supports the notion that the company’s ‘lightbulb’ moments can light up investment returns. Not only has PSG recently signalled the possibility of listing energy Partners within two to three years, but it has also pencilled in some astounding growth projections for this specialist business.
PSG, which has now increased its stake to 57% in the business, believes turnover can grow from current levels of around R100m to around R800m by 2020. Even more impressive is the profit growth from R6m in the 2015 financial year to R14m next year. It’s well known the PSG are demanding taskmasters, so no surprise then that the medium-term outlook pencils profits of R38m for 2017, R65m for 2018, R94m for 2019 and a hefty R140m for the 2020 financial year.
PSG noted that Energy Partners had undergone a R90m rights issue, and obtained its first R30m commercial debt arrangement. There appears to be strong growth prospects with PSG adding that there is current capacity for further R200m to R300m funding, which might be tapped as early as 2016.
Energy Partners already has an impressive client base – including retailers Pick ‘n Pay and Fruit & Veg City as well private hospitals group Netcare and dairy giant Parmalat. Well-known wine estates Tokara and Koelenhof also use Energy Partners services.
But the nitty gritty numbers sown on energy partners website arguable shows the real longer-term potential of the business.
The company has secured a cumulative R423.5m for customers. Energy Partners manages 2,288 meters on 415 sites, and the value of the collective bills under management is getting close to R1bn.
It seems Energy Partners will find themselves in a large sweet spot over the medium-term. The company’s website predicts that South African energy prices are set to double within the next five years. Energy Partners further contends that investments in renewable energy, energy usage and infrastructure have long ceased to be an option to ignore for organisations and business owners.
The company notes that struggling energy utility is aggressively incentivising energy efficiency initiatives under various incentive programs, sometimes up to 100% of capital costs. Energy Partners submits applications to Eskom, thereby securing significant funding for clients.
Some of the services offered by Energy Partners include energy metering, efficient refrigeration (commercial and industrial,) efficient lighting (like LED lighting solutions,) efficient water heating, solar PV, voltage optimisation, power factor correction as well as electricity tariff selection and switching.