APR Energy gets growth funds after private equity sale

22 June 2011

UK private equity company Horizon Acquisition has bought the US-based power rental company APR Energy for US$855 and said it will provide around $275 million to fund expansion.

APR, based in Jacksonville, Florida, is the second largest power rental company in the world after Aggreko and was founded in 2004 by John Campion, CEO, and Laurence Anderson, COO, through a buy-out of Alstom's power rental business.

Its revenues last year were US$126 million (€94 million) - which means that it is still dwarfed by Aggreko's sales of €1.4 billion - but its fleet has doubled in the last 12 months and it aims to challenge Aggreko's supremacy in the international power projects sector.

Horizon is a private equity firm established in February 2010 by UK entrepreneur Hugh Osmond, who is well known in UK business as the co-founder of the Pizza Express restaurant chain and pub group Punch Taverns.

APR has a compound average growth rate of 69% between 2006 and 2010 and it now has a fleet capacity of 714 MW, boosted by recent investments from investment funds Soros Fund Management and Albright Capital Management.

In April the company won a contract to supply 203 MW of power with Tokyo Electric Power Co (TEPCO) in Japan following the March earthquake and tsunami.

A key feature of the Horizon deal is the $275 of investment capital that will be made available to APR, which could boost its fleet by a further 500-600 MW.

John Campion, APR's CEO, said the transaction would "accelerate our ability to address this growing market opportunity with immediate capital to fuel growth and long term access to capital markets that truly understand our business."

He said there was growing demand for temporary power in many regions around the world, particularly in emerging markets; "there is a significant and widening deficit of power that is holding back economic growth and living standards".

Mike Fairey, chairman of Horizon, said he believed that APR represented a great investment; "We see its proven track record in a fast growing global marketplace, with historical returns on capital of over 30%, as only the start of what it can achieve.

He said the acquisition price was attractive relative to its largest quoted competitor - which is Aggreko - and that the investment would "accelerate APR Energy's ability to grow, and its stock market listing will enhance its reputation and provide further access to growth capital if required."

Horizon said it will be renamed APR Energy plc and become listed on the London Stock Exchange by the end of September.

Rupert Soames, CEO of Aggreko, quoted in the Financial Times, dismissed the idea that APR represented a new threat to Aggreko; "They have been locking horns with us for a long period of time...Over the eight years that they have been competing with each other, they have grown their business very rapidly and our performance hasn't been entirely shabby either."

APR Energy operates a power fleet comprising diesel, gas turbines and dual fuel diesel and gas engines. It employs more than 500 people in 10 countries and rents its generators typically for one to three year periods, mainly in emerging countries.

When the acquisition is complete, Horizon will own around 60% of APR, with management retaining a 12% share and Soros Fund Management and Albright Capital Management holding 14% and 13%, respectively.

Other competitors to Aggreko and APR include Dubai-based Rental Solutions & Services (RSS) and European company Energyst.

RSS had estimated revenues last year of around €55 million and is also a fast growing company in developing markets. Energyst, which is jointly owned by a number of Caterpillar dealers in Europe, reported sales of €65 million in 2009 but its growth has been hampered by a reliance on slower-growth European markets.

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