Techem’s core business is considered boring but highly attractive.
(Photo: dpa)
Frankfurt The heating and water meter reader Techem has started preparations for an IPO, which could be the largest in Germany in the coming year. The owners, the Swiss financial investor Partners Group and two Canadian pension funds, are in the final phase of selecting the banks to accompany the deal. Several people familiar with the matter said so. Techem could be valued at up to eight billion euros.
According to the information, the investment banks Goldman Sachs and UBS are at the forefront of the race to organize the preparations for the IPO and alternatively a sales process. Techem, the banks and the owners Partners Group, CDPQ and OTPP declined to comment or were initially unavailable.
Founded in 1952, the company employs around 3,900 people and is active in more than 20 countries. According to financial circles, sales should increase to almost one billion in 2024, and the operating result should reach around 400 million euros.
Sale as an alternative to going public
When evaluating a company, the banks recommend investors to orientate themselves on deals in the sector. The energy service provider Getec was sold in 2021 for twenty times its operating profit. On the other hand, stock market valuations of competitors are used for comparison, such as Smart Metering Systems listed in London, the Swiss Belimo and the US company Badger Meter, which are trading at 16 to 27 times the price.
Partners, CDPQ and OTPP acquired Techem five years ago at a valuation of €4.6 billion from infrastructure investor Macquarie. Should there be a sale rather than an IPO, other infrastructure or sovereign wealth funds are considered potential buyers. Competitor Ista is also owned by an infrastructure investor. In 2017, the Asian billionaire Li Ka-shing bought the Essen-based company through his holding CK Infrastructure.
Receptive capital markets are a prerequisite for a successful IPO. In view of the geopolitical uncertainties and the cooling economy, there were hardly any new issues this year, despite record levels in the leading index, the Dax. So far, only the web hosting company Ionos has gone public in Germany – but the share has since fallen by more than a quarter.
The Thyssen-Krupp hydrogen subsidiary Nucera is currently on the market, and the subscription period for the new shares runs until July 5. Candidates such as pharmaceutical packaging manufacturer Schott Pharma and armored gear manufacturer Renk are in the starting blocks for the fall. A number of companies are also preparing for an IPO in the coming year. As of now, none of them should be as big as a possible Techem IPO.
Smart meter as an essential component of the energy transition
Techem’s core business, based in Eschborn near Frankfurt, is considered boring but highly attractive. The company has specialized in reading and billing heat and water consumption. This brings steady and easily calculable income, with the construction boom of the past few years the business has increased steadily. Techem currently looks after more than twelve million homes, including 2,900 heat generation systems.
A major topic in recent years has been the switch from turntable counters to digital measuring devices that can be read remotely. Of the 53 million installed measuring devices – including smoke detectors – 47 million are now digital.
>> Read also: How startups are working on tools for optimal thermal management
Techem sees the so-called smart meters as a key component of the energy transition. Users can use it to precisely understand their energy consumption and adjust their behavior or, based on the insights gained, energetically refurbish their building.
“A CO2-neutral building stock requires a holistic view of the available data. This is the only way to fully exploit all the potential for optimization,” said Techem boss Matthias Hartmann in mid-June. Through regular heating monitoring and optimized operational management, an increase in efficiency of 15 percent can be achieved.
More: Demand for IPO of Thyssen-Krupp subsidiary exceeds supply