Resurgens Technology Partners achieved its “primary M&A objective” by adding Irish energy management analytics provider Wattics to its portfolio company EnergyCAP and will now focus on expanding the firm’s customer base into the commercial sector, Resurgens managing director and co-founder Fred Sturgis told PE Hub Europe.
Boalsburg, Pennsylvania-headquartered EnergyCAP is an energy and sustainability enterprise resource planning software provider. Resurgens invested in the founder-owned and operated business in March 2021.
The company provides energy analytics, with a bent towards financial analytics, and helps organisations with complex underlying energy infrastructure and billing requirements to monitor and optimise energy consumption, said Sturgis.
“The company’s primarily sold historically to the education space, K-12, higher ed and government,” added Sturgis. “While they have commercial customers, it’s been largely focused on those sectors.”
Buying Dublin-based Wattics in late August will help the firm expand into the commercial market, according to Sturgis. Wattics provides what he calls “interval data”. Rather than just providing information on energy consumption at the end of the billing cycle, Wattics allows daily – “or even more frequent if you need it” – consumption information, which allows for richer analytics, he said.
“The primary thesis is to be able to bring that capability, which really resides in Wattics, into the EnergyCAP offering,” Sturgis added. “There’s a much clearer value prop for a wider array of businesses with this capability. Consultants who advise people on their energy programmes have long been a Wattics focus. We would expect to continue to service that market as well.”
Other firms with similar capabilities to Wattics include eSight Energy and Energist, although Resurgens and EnergyCAP only pursued Wattics. Wattics’ product strength of offering and capabilities made it stand out, said Sturgis.
One example is Wattics’ use of artificial intelligence to assess abnormalities in energy usage. The system can identify spikes in energy and alert the user. But the AI allows the system to assess whether the spike is a true abnormality – and thus to alert the user – or if it is just caused by, for instance, the air conditioning unit guzzling energy first thing in the morning.
Buying Wattics will also grow EnergyCAP geographically, although that was a “natural by-product of the combination” rather than the “primary M&A objective” of adding the Wattics functionality, said Sturgis.
“Predominantly, we were looking for best-in-breed capabilities in this analytics and reporting space and Wattics really spiked as a leader in terms of the offering that they had built,” he said. “It happened to be in Ireland. Honestly, if it had been in Des Moines, Iowa, we probably would have bought it there. Because of their geography we’ll be more relevant as a company in Europe than we’ve been historically.”
Atlanta, Georgia-based Resurgens is a software buyout private equity firm that focuses on the lower mid-market. The purchase of founder-owned Wattics was its third European transaction, the first two being UK-based. All three have been add-on investments.
“We haven’t made a platform investment in Europe yet,” said Sturgis. “But we do have a high degree of interest and continue to invest across the board in Europe.”
That interest in Europe comes because Resurgens’ businesses are increasingly looking to expand globally. That was not the direct driver of the Wattics move, but for the earlier two acquisitions, “European expansion was a big part of the underlying thesis”, said Sturgis.
“We’re in relentless pursuit,” he added. “Where can we find the best software companies that have most typically been founder-owned and operated? There’s a large number of them in Europe, like there is in the US, and there’s maybe fewer investors in Europe that can bring a US dimension to the investment thesis. We view it as an attractive opportunity.
“The offering we’re gaining from Wattics will unlock great organic growth opportunities. Organic growth is the engine for a Resurgens investment, but we’ll always evaluate interesting ways to extend our value proposition through M&A.”
The rising cost of energy will also help EnergyCAP grow organically, said Sturgis. “Clearly, in an environment where prices are rising, it just enhances the value proposition. It creates more saving opportunity per unit of consumption. That’s a huge driver. But it’s also just ESG and a focus on sustainability – it’s a ubiquitous topic across all business now, and even non-profits. It’s a very compelling space and there will continue to be growth and continued demand for these products.”