KKR takes Glasgow's Smart Metering Systems private in £1.4B deal

Glasgow-based Smart Metering Systems (SMS) is to be delisted and acquired by KKR in an all-cash deal valued at £1.4 billion.

While the buyout comes at a 40 percent premium, KKR believes that Smart Metering Systems’ established smart meter technology, burgeoning capabilities in grid-scale battery storage (BESS), and additional carbon reduction activities (CaRe) have the potential to play a substantial role in the UK Government’s 2050 net-zero goals.

With Battery Energy Storage Systems (BESS) initiatives gaining traction, particularly across the UK, as evidenced by Statera Energy’s recent £300 million debt financing round, they don’t come cheap.

In 2022, SMS reported pre-exceptional EBITDA of £63.8 million, an underlying profit before tax of £24.5 million, and an index-linked annualised recurring revenue (ILARR) of £97.1 million.

The KKR acquisition not only presents shareholders with healthy ROI, but with $519 billion in assets under management, Kohlberg Kravis Roberts & Co. paves the way for Smart Metering Systems operate without capital constraints.

Founded in 1995, Smart Metering Systems IPO’d on the LSE’s sub-market AIM in July 2011. Today, the company employs approximately 1,500 individuals distributed over eight locations.

On the acquisition, SMS CEO Tim Mortlock shared:

"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 offer price represents a significant premium to the current share price and allows shareholders to realise immediate and attractive value for their shareholding."

KKR Partner and co-head of European Infrastructure Tara Davies added:

“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.”

Lead image via SMS.