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Under-the-radar Adelaide software company Energy Exemplar has surprised the market by signing a $1.6 billion sale to a pair of private equity heavyweights. The company, known for its energy system modelling software tool Plexos, has gained international attention and is used by players in the energy market to simulate and predict supply and demand scenarios.
Under-the-radar Adelaide software company Energy Exemplar is the M&A surprise of the year after signing a $US1 billion-plus sale to a pair of private equity heavyweights. Almost unheard of outside its niche sector and completely unheralded when it comes to Rich Lists or tech ecosystem unicorns, Energy Exemplar has turned into a home run for its founder Glenn Drayton, private equity backer and management team.
Simon Feiglin, who oversees The Riverside Company’s Australian fund and team, in Melbourne on Monday.Energy Exemplar started as Drayton Analytics in 1999. Founder Glenn Drayton was fresh out of the University of Canterbury, where he completed a doctoral thesis and had looked at energy market modelling. Drayton created Plexos, an energy system modelling software tool, which was picked up in Ireland and started gaining international attention. The software helps energy market players – generators, traders, regulators – simulate and model scenarios and try to predict where demand and supply is going based on things like population growth, renewable energy uptake and the like. Australia’s AEMO uses it to help with grid stability, for example.By 2015, Plexos completed its 1000th installation, and Drayton’s company was called Energy Exemplar. Private equity firm The Riverside Company, a US group with a team in Melbourne that scouts for small-to-medium sized Australian deals, took a controlling stake in 2017. Back then, Energy Exemplar had about 70 staff and was making about $20 million in annual recurring revenue. It bought EPIS, which owned a similar platform called Aurora, soon after to increase its footprint in the United States and Canada.Annual recurring revenue is six to seven times what it was in 2017, according to Riverside managing partner for Australia Simon Feiglin, while the group has more than 600 staff globally. In private equity speak, that’s a 30 per cent a year growth story . So Riverside, six years into its investment, Drayton and Co put the business up for sale. They had received inbound interest over the years, and told potential suitors there was a lot more to do in consolidating the industry, and growth left in the tank. It ends Riverside’s remarkable six-year stay with the company, and will make founder Drayton and his fellow investors a lot of money.“It is a very good one for us, and Glenn and the management team,” Riverside’s Feiglin says, although he declined to reveal exactly how much the company fetched at auction. Energy Examplar is used by all sorts of electricity market players to try to model and predict future market conditions.The deal puts Energy Exemplar up there with Canva, Airwallex, Rokt, Immutable, Employment Hero, Safety Culture, Message Media and Culture Amp as Australian tech unicorns. Energy Exemplar has gone one better than most of that list: it has also found an exit for its major backer.The deal is sweetly timed for Origin Energy, which is sitting on a 20 per cent stake in another energy software play, Kraken owner Octopus Energy.While Kraken and Plexos play in different parts of the sector – one is more customer billing and management, the other modelling and simulation – they are both about subscription revenue and the energy sector. Origin expert Grant Samuel valued Octopus Energy at 8.8 to 9.6-times historical earnings; Energy Exemplar’s deal looks more like 10-times revenue. That’s a big difference. If Energy Exemplar attracted multiple bids – Riverside’s Feiglin called the auction “hotly contested” and mostly run out of the United States – you would have to think Octopus/Kraken would attract at least the same amount of interest. It is bigger, younger, faster growing and makes a lot more money. But back to Riverside: Feiglin called it a “textbook deal” for the mid-market buyout fund. Its local team targets under-the-radar Australian and New Zealand businesses that it thinks it can help grow, usually by helping take them offshore or via bolt-on M&A deals. The Riverside Company has been in Australia’s deals scene since 2009, investing from its global buyout fund before kicking off a specialist Riverside Australia Fund strategy. It tries to invest $25 million to $100 million at a time, and targets businesses with up to $25 million in earnings. It has just about invested three full Australian funds and started preparing for its fourth Australian fund, dubbed Riverside Australia Fund IV and targeting up to $US450 million, late last year according to filings with the US Securities and Exchange Commission. Feiglin declined to comment on any fundraising activities.One of its claims to fame – which isn’t to be quickly dismissed given what can and does happen in PE – is that it has not lost money on any Australian or NZ deals .Other significant deals include Kiwi animal vaccination guns-maker Simcro, where revenue increased 2½ times during Riverside’s 4½ year ownership, before a sale to an offshore strategic buyer. It also did well at waste broker and collector Waste Services Group, where revenue and earnings increased three times before a sale to UK-based mid-market investment group Livingbridge.“There’s a vast opportunity for most companies to move offshore. We think we can help companies do that, and have been doing that 35 years,” Feiglin says.is a Chanticleer columnist. He is a former Street Talk co-editor and has 10 years' experience as a business journalist and worked at PwC, auditing and advising financial services companies.
Adelaide Software Company Energy Exemplar Sale Private Equity Plexos Energy Market Modelling Supply And Demand
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