EnergyTechnologyTop10
M&A Activity Across Energy IT
There have been significant developments in IT companies from divestments by private equity firms in retail energy, to
private equity investments in wholesale energy technology – along with a significant number of acquisitions. This M&A
activitysuggeststhefollowing:
1. Exchangesareacquiringandcross-investingwherepossibletobetterestablishtheirpositionsintheenergytradingvalue-
chain, such as settlement or regional expansion for additional product offerings. ICE’s acquisition of NYBOT is strategic in
expanding clearing and settlement offerings while NYMEX is clearly positioning with the Montreal Exchange and others.
AdditionalinvestmentsinexchangesintheMiddleEastandAsiawillbeimportanttowatch.
2. MorepubliccompaniesareacquiringandconsolidatingretailenergyITassets–fromdatamanagementtometeringto
billing. Many of the sellers were backed or owned by private equity firms. Most of these sellers are experienced energy IT
investors.ThisconsolidationtrendinCISandmeteringandbillingislikelytocontinue.SmartGridandcarboninitiativesare
drivingmanyoftheacquisitionstrategies.
3. FewpublicITconglomeratesareacquiringwholesaleenergyITassets.InsharpcontrasttoretailenergyITassets,private
equityfirmshaveinvestedinwholesaleenergyITcompaniesfromearlyon,withQuadrangleinvestinginGED,toTechnology
CrossoverVenturesinSolarc,TAAssociatesinOpenLinkand,mostrecently,ABRYPartnersinTriplePoint.Thefirstofafew
divestmentsinthissectorwasQuadrangle’sdivestmentofGEDtoVista’sVentyx.
Decisions and then the acquisition of GED by Ventyx, (Vista marketbasedonSAPinretailenergybillinginEurope–whichhas
privateequitybacked).VentyxhasgoneontoacquirenMarket. thesimilareffectofunderminingin-houseprocurementofenergy
Dachs (Hamburg) has venture capital backing and is pushing billingsystems.
intothemiddle-tierwithePowerandeRisk.
Bulk Commodities
IRM(Vienna),acquiredbyOpenLinkFinancial,maycontinueto
In physical and bulk commodities including oil, Solarc (Tulsa
provide significant penetration into middle-tier and additional
and Houston) raised capital from Technology Crossover Ventures
energy IT expertise beyond trading and trading related risk
(Palo Alto) and executed a small acquisition of Trinity Apex
management. OpenLink will need this expansion to sustain
Solutions.TriplePoint’srelationshipwithSAPinEuropehasledto
revenue growth beyond reliance on tier-one multi-year projects,
significantopportunitiesforthisvendorandTriplePointappearsto
whicharecompromisedbythebankingcrisis.
be investing in more regions such as Asia and Latin America.
Soptim(Achen)isalsoofferingportfoliomanagementservices.
Entero (Calgary) finally launched EnteroOne in December 2008
Kom-Strom (Leipzig), a subsidiary of Essent, is also providing
while TradeCapture (Stamford) has been quietly changing
portfolio management software along with consulting to second
organisationally, and it’s product roadmap, along with a major
andthird-tiermarketparticipants.
rebrandingtoAmphora.
SomeoftheseISVsinthemiddle-tierhaveforeignexchangeand
money market treasury capabilities, while others are developing
Back Office Processing & Settlement
thisfunctionality.Mostaredifferentiatedfromtop-tierETRMwith
Back office processing in exchange listed contracts was
moreforecastingandportfoliooptimisationcapabilities.
significantly serviced by three main vendors, – SunGard Futures
Calypso (San Francisco) and FNX (Philadelphia) in North
(Chicago), Rolfe and Nolan (London), and to a lesser extent GL
America were entering into broader commodities/energy trading
Trade’s Ubitrade (Paris) – as an alternative to in-house
and risk with some isolated, but significant, wins with major
developmentorsoftwareprocurement.Butnowthisisdowntotwo
financialinstitutions.TheFNXacquisitionbyGLTrademighthave
providers,SunGardandRolfeandNolan.
enabledsignificantglobalexpansionwiththeFNXASPofferingbut
WhiletheclientmarkethasbeenimpactedsignificantlybyFCM
the subsequent acquisition by SunGard suggests that the product
mergers and then by Refco’s demise. GL Trade (Paris) acquired
will be lost given the significant number of capital market assets
Ubitrade (Paris) a few years ago then recently acquired FNX
withinSunGard.Theseplayersarelikelytodisappearinthissector.
(Philadelphia) in the capital markets, (and most recently was
In Europe, successful capital markets vendors such as Sophis
acquiredbySunGard).
(Paris) and Murex (Paris), the leading capital markets vendor
Rolfe and Nolan was last summer acquired by Ion Trading, a
globally, entering the ETRM market more slowly than expected
fixedincomespecialistbackedbyTAAssociates.Thisisinteresting
with physical trading functionality limitations but have won a
becauseTAAssociatesalsoownsthemajorityofOpenLink.
numberofenergyclientsandprovidebundledfunctionalitytoa
In settlement, the solutions have shifted more to being
numberofmarketparticipants.
incorporatedwithbundledservicesofexchangessuchasNYMEX
More than 50% of ETRM vendors have had investment from
andICEoutofNorthAmerica.
•
venturecapitalorprivateequityfirmsandtheseinvestmentsare
A list of Energy Technology M&A’s is
morethan3to5yearsold.Itisthereforelikelywewillseemore
available on page 158
exittransactionsinthissectorthannewinvestments.
Bundled Solutions
Paul MahadyisfounderandPresidentofMarketAdvisory
In analytics and data management – along with transaction
Services(MAS)–anadvisoryboutiquespecialisingin
management–therearemultipletop-tierenergycompanieswhich
commoditiesandfinancialinformationtechnology.
continue to provide portfolio management services to smaller
MAShasundertakenstrategicadvisoryassignmentsfor
utilities, industrial clients, and municipalities. This is a form of
centralbanks,exchanges,investmentbanks,majorenergy
ASP with trade execution capability and a substitute for direct
conglomerates,privateequityfirmsandISVs.
software procurement. There is also a significant service bureau
www.masenergy.com
worldPower2009 75
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