KKR Acquires Energy Infrastructure Provider Smart Metering for $1.7 Billion – ESG Today

Alternative asset and private equity investor KKR announced an agreement to acquire energy and electrifications solutions company Smart Metering Systems (SMS), describing the company as having the “potential to substantially contribute to and enable the energy transition,” and “expected to play a leading role to support the UK Government’s ambition to be net zero by 2050.”

Under the terms of the all-cash agreement, KKR will pay 955 pence per share for SMS, valuing the company at an enterprise value of £1.4 billion (USD$1.75 billion).

Founded in 1995, Glasgow, Scotland based SMS provides a range of energy infrastructure and data solutions and services, including installing, owning and operating smart meters, battery energy storage systems (BESS), and EV chargepoints, and other behind the meter assets such as solar, storage and heat pumps. The company also offers “METIS,” a cloud-based data platform that operates low-carbon assets distributed across the energy network.

KKR will invest in the transaction primarily through its $17 billion KKR Global Infrastructure Investors IV fund. The transaction marks the latest in a series of energy transition infrastructure-focused moves for the firm, including a recent $750 million investment in London-based transport electrification and battery storage solutions provider Zenobē, and the launch of a series of clean energy platforms including Virescent Infrastructure in India, Aster Renewable Energy in Asia and Stellar Renewable Power targteing long-duration high-yielding solar energy investments. 

In an overview of the transaction, KKR said that it believes that SMS will be able to accelerate its growth under private ownership, to transition to “a fully integrated, end-to-end energy infrastructure company which owns, installs and manages carbon reduction assets,” noting that a private setting will enable the company to finance the “substantial” capital requirements necessary “to fully realise the growth opportunity presented by the UK’s energy transition.”

Tara Davies, Partner and Co-Head of European Infrastructure at KKR, said:

“SMS has a strong asset base and a clear strategy across different business lines which are critical enablers of the UK’s Net Zero goals, and we share the team’s vision of putting SMS at the heart of the UK’s energy transition. Achieving this growth opportunity requires significant capital of a scale, flexibility and certainty which is best facilitated in the private markets.”

SMS CEO Tim Mortlock added:

“KKR’s offer recognises the strength and resilience of our model and will ensure SMS has the necessary capital to accelerate and unlock its full growth potential.”

The companies expect the acquisition to close in early 2024.