In view of the Ukraine war and the skyrocketing gas prices, Innio products have lost some of their attractiveness.
(Photo: PR)
Frankfurt According to financial sources, the gas engine manufacturer Innio has started preparations for an IPO. Investment bank Lilja is currently selecting banks that could accompany the new issue on behalf of the owner, US financial investor Advent, according to people familiar with the matter.
The deal could be completed in autumn at the earliest, alternatively a sale to a competitor or investor is possible. A valuation of up to five billion euros is in the room. However, the prerequisite is that the capital market environment is right. The high price fluctuations are currently making IPOs impossible. Advent, Innio and Lilja didn’t want to comment.
Innio manufactures Jenbacher and Waukesha branded gas engines. The Austrian-based company originally belonged to General Electric. The US group sold them to Advent in 2018 as part of its restructuring. Gas engines are used in power generation and combined heat and power generation – to generate electricity and heat buildings at the same time – and as emergency power generators in data centers and hospitals, for example.
The engines usually burn natural gas or biogas. From this year, however, customers can also order engines that run on hydrogen, which can be obtained from wind power or solar energy in a climate-neutral manner.
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With around 3,500 employees, Innio generated sales of around 1.4 billion euros in 2020. According to financial circles, the company is targeting an operating result (Ebitda) of 350 million euros for 2022. Advent is hoping for a valuation of more than 14 times expected Ebitda. However, competitors like Cummins, Caterpillar, or Rolls Royce are currently trading in a range of 8x to 11.5x, so investors would need to be convinced that Innio warrants a higher valuation.
Advent and the former Osram CEO Olaf Berlien, who was hired as head of the company last year, are building on the service business. Innio already generates more than half of its turnover with maintenance and the collection and evaluation of data. From the investor’s point of view, the reliable proceeds from the sale of these services are a plus compared to the fluctuating income from the sale of new gas engines.
The former Osram CEO has been running Innio’s business since last year.
(Photo: Reuters)
In view of the Ukraine war and the skyrocketing gas prices, Innio products have lost some of their attractiveness. In the long term, however, they are considered a bridging technology to compensate for fluctuations in the supply of electricity. When nuclear and coal-fired power plants are shut down and increasingly replaced by the volatile energy sources solar and wind, mini power plants are needed to keep the grid stable.
As an alternative to a possible IPO, Advent wants to address potential buyers – including Siemens Energy, Cummins and MAN Energy Solutions. The large engine manufacturer, which belongs to Volkswagen, was itself for sale two years ago. However, VW then agreed with the works council to initially retain a majority stake. In view of its strong digital profile, Innio is considered interesting for MAN. It is unclear who will decide to bid in the end.
Other financial investors are also considered possible buyers. However, many private equity houses have made it their mission to pay attention to ESG aspects when making investments. ESG stands for ecological and social criteria as well as good corporate governance. Investing in fossil fuel-related companies falls through the cracks for many investors.
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