Using AI and IoT technology to improve energy and water efficiency in commercial real estate

OnMarket Bidding Closed EP&T Global Ltd ASX: EPX

OnMarket | EP&T Global Ltd IPO | ASX: EPX

Fixed Priced IPOType of Offer
31 Mar 21Offer Open
12 Apr 21Pay By
$0.20Price
$11 millionSize of Offer
$2,000 Minimum Investment
Bell PotterLead Manager

IPO closed early via OnMarket due to strong investor demand.  Please ensure applications are funded by 5pm, Monday 12 April to avoid missing out.

The offer may close early and the 'Pay By' dates may change. Applications may be scaled back and duplicate bids under the same investment profile, investor name or residential address may be cancelled.

Investment Highlights

Introduction

EP&T Global Ltd (ASX: EPX) delivers building energy management solutions that reduce energy and water wastage and improve energy efficiency within commercial real estate. EP&T works with its clients to identify opportunities to optimise building plant operating systems and settings through its proprietary cloud‑based data analytics software platform and data collection tool and then assists clients to implement these initiatives to reduce a building’s energy, water and gas consumption and improve operational performance.

EP&T has exclusive access to a wealth of information gathered over the last 27 years and this has led to the development of the EDGE platform, an innovative technology using Internet of Things (IoT) devices, algorithms and Artificial Intelligence to deliver energy, water and operational efficiencies in buildings across the world.  The global Building Energy Management Systems market was approximately $5.93 billion in 2019 and is expected to reach $9.54 billion by 2025.

The Company’s Head Office is in Sydney and it also has offices in the United Kingdom, Dubai and Hong Kong. EP&T provides its services to over 280 buildings in 18 countries including in Europe, Asia, Australia, United Arab Emirates and USA and has recently commenced engaging with clients under a ‘Software as a Service’ or SaaS model and is moving to recurring monthly or quarterly fees, thereby reducing upfront costs to clients.

EP&T have achieved compound annualised contract value growth from FY2018 to FY2020 of over 24% and generates recurring revenue via a subscription model sold directly to clients.

Offer Overview

EP&T Global Ltd is looking to undertake an IPO on ASX to raise $11 million via the offer of 55 million shares at an offer price of $0.20.  The company will have an indicative market capitalisation of approximately $37.2 million at the maximum raise on a fully diluted basis.

Industry Overview

EP&T is a vendor, supplier, and service provider of Building Energy Management Systems (BEMS), which are used by building owners and operators to reduce energy consumption and costs.  BEMS is a computerised system that monitors, manages, and optimises the actual performance of building services, such as Heating, Ventilation, and Air Conditioning (HVAC) and lighting systems, in commercial and industrial buildings and systems typically interface with building management and control systems (BMCS) that are used to control all aspects of a building. The Company’s EDGE technology collects and analyses data from numerous sources within buildings to identify opportunities to reduce energy consumption.

The Company works with clients in a variety of industry sectors, including real estate investment trusts (REITs), hotels, clubs and shopping centres. Users of EP&T’s technology are typically able to achieve substantial savings in energy (and water) usage.

The global BEMS market was estimated at $5.93 billion in 2019 and is expected to reach $9.54 billion by 2025.  Total building floor space has increased over time and this trend is driven by macro trends around population growth, industrialisation, as well as growth in incomes. Between 2000 and 2019, total floor space has increased 65%. This increases the addressable opportunity for BEMS.

BEMS Market: Revenue Forecast, Global, 215-2019 and 2025

Energy costs are approximately one‑third of the operating expenses of commercial buildings. To help to address the challenge of significant energy costs, BEMS can play a major role in improving the energy efficiency of buildings by acting as a bridge between the load and the generation point. BEMS does this by supporting the automation of energy optimisation by operators who can view usage in real time using cloud‑based online platforms. In addition, the application of predictive analytics to the building’s energy data can help avoid sudden break downs and disruptions.

Business Overview

EP&T was founded in 1993 on the principles of Environment, Property and Technology. Initially supplying hardware‑based energy efficiency solutions in the Australian market. The experience gained from this market was first channelled into a manual, data‑driven operational efficiency solution and as they expanded and technology advanced, they combined their data‑driven insights and Intellectual Property (IP) with research and development to create the proprietary EDGE software solution. After 27 years of operation, data sources and analytics capabilities in the building energy optimisation space are well‑honed and constantly evolving.

EP&T has an international presence with offices in Europe, the Middle East, Asia and Australia and continues to expand into new territories. With several client relationships spanning 10 years, EP&T has proven to be a trusted analytics partner for its clients. EP&T’s clients include entities such as British Land, M&G Real Estate, Derwent London, IHG, and Property NSW.

EP&T’s EDGE Platform

EP&T’s EDGE platform is a stand‑alone, modular solution for building owners, operators, and occupiers. EDGE plays a significant role – from data capture at the property, to aggregation and analysis, to the implementation of EP&T’s solutions.  The Energy & Water Analytics module is the core component, and clients can customise remaining modules and performance optimisation services to suit their specific needs.

The EDGE platform is hardware agnostic and can capture, cleanse and aggregate data from multiple sources within a building. EP&T designs its solutions around the characteristics of each individual building and based on client requirements.

The full suite solution comprises of four stages, to which the EDGE platform is central. The figure below shows the process flow of how EP&T delivers the benefits it provides to clients.

Clients are categorised into three key groups:

  • Building Owners;
  • Operators; and
  • Occupiers.

Each has their own specific requirements when it comes to building optimisation. The EDGE platform has been designed to be flexible enough to meet the needs of all three client groups. For example, the reporting functionality and capabilities of the EDGE platform can be used smartphone, tablet and desktop. The Building in your Pocket’, the EDGE smartphone (and tablet) app provides client site teams with access to alerts even when they are away from their desktop computers, and regardless of whether they are an owner, operator or occupier.

Product Strength

There are a number of key competitive strengths to our platform. These include:

  • A single platform (EDGE) with a comprehensive monitoring and data analysis tools.
  • High fidelity, granular data capture with systems designed to capture the level of data most suited to the client’s building and goals which delivers accurate insights and energy savings.
  • Machine Learning Capabilities using the depth and breadth of over 27 years of data capture to continually inform optimisation recommendations.
  • A stand‑alone, modular solution
  • Hardware agnostic that can capture data from multiple sources and devices and doesn’t limit capability to service different asset classes.
  • Performance optimisation processes combining detailed analytics, insights and experience of engineers and collaborative client interaction.
  • Not reliant on third parties for the provision of core software solutions.

Average annual savings achieved across EP&T’s client portfolio when compared against the baseline year is approximately 22%.

This equates to over 100,000 tonnes of CO2 emissions avoided each year, which is equivalent to taking over 22,000 passenger vehicles off the road annually and over the past 5 years EP&T has delivered over $110 million in energy savings for clients.

Revenue Model

EP&T generates revenue by selling the EDGE platform under a SaaS subscription direct to clients. The SaaS fees cover all system set up costs and ongoing services for a client in a fixed recurring fee. Fees are charged monthly, quarterly or annually. On occasion, revenue is derived from upfront charges to clients or through one off sales of ancillary services or equipment.

Global ACV CAGR of 24% was achieved from June 2018 to June 2020. At February 2021 ACV is $8.1 million up from $7.6m at June 2020. Prior to June 2018 the majority of ACV was generated within Australia. Investment in overseas operations has delivered a 57% CAGR in non‑Australian based ACV from June 2018 to June 2020 and this now represents 64% of total group ACV.

Total Annualised Contract Value (A$m)

Growth Strategy

EP&T has the following key strategies for growth:

  • Investing in Sales and Marketing – Investment will be made in expanding EP&T’s sales team to enable the successful roll‑out of the SaaS model globally. This will be supported by targeted marketing campaigns to increase EP&T’s brand recognition and gain deeper levels of market penetration.
  • Moving to a SaaS based client engagement model – Historically, EP&T used a capital model with high upfront installation fees to clients. In September 2019 this was replaced with a SaaS based model benefitting from lower or no upfront costs to clients.
  • Driving product innovation – continued product innovation to meet EP&T’s client needs. The expansion of the product suite may open up further cross sell opportunities and increase EP&T’s addressable market.
  • Further International Expansion – EP&T has successfully established offices in three countries outside of Australia. It has a pipeline of global sales opportunities and will assess if further international expansion will be pursued in those regions where EP&T considers the greatest addressable market opportunities reside.

Key Offer Statistics

Use of Funds

Funds Raised from the Offer will be applied as follows:

Board and Management

The Directors bring to the Board relevant experience and skills, including industry and business knowledge, financial management and corporate governance experience. These include:

Jonathan Sweeney - Independent Non‑Executive Chairman

Jonathan has enjoyed a distinguished career, working in financial services for 35 years. He was the Managing Director of Trust Company (now part of Perpetual) from 2000 till 2008 where he oversaw the merger with Permanent Trustees, established Trust’s business in Singapore and established a joint venture with The Bank of New York. He then co‑founded Equity Real Estate Partners in mid‑2009 that back door listed into Folkestone (now part of Charter Hall) where he became Folkestone’s COO with responsibilities for the legal, regulatory, financial and operational areas.

Keith Gunaratne - Founder and Executive Director

Keith founded EP&T in 1993and has been involved in developing energy conservation technologies for over 20 years and has extensive experience applying these technologies to the commercial, retail and industrial sectors.

John Balassis - Independent Non‑Executive Director

John has over 25 years in strategy and M&A across a range of industries including infrastructure, transportation and energy. John has worked in both Australia and internationally. He is a former senior executive at KPMG. For the past several years John has been a Board representative and CEO of investee entities for a US based energy and resources specialised investment firm.

Victor van Bommel - Independent Non‑Executive Director

Victor has over 20 years’ experience in investment banking and real estate. Victor is CEO and founder of Orange Capital Partners (OCP), a real estate investment firm based in Amsterdam, who own and manage a portfolio of real estate assets in excess of USD$3.5bn.

Trent Knox - Chief Executive Officer

Trent has worked primarily in the automotive and software industries for 30 years and brings his extensive experience in strategic and inclusive business leadership to EP&T with a focus on strengthening the bonds between its customers and people. His diverse career in SaaS, platform delivery, sales, automotive, franchising and financial services includes significant highlights with a strong growth focus.

Richard Pillinger - Chief Financial Officer and Company Secretary

Richard has over 15 years’ experience in senior financial management activities within Australian and US publicly listed companies, including 4 years within the Washington H Soul Pattinson Group of companies. Over the past 10 years, working at EP&T and BlueNRGY Group Richard’s career has been focused on the global renewable energy and sustainability industries.

Rajesh Jampala - Chief Operating Officer

Rajesh is responsible for managing EP&T’s global operations including overall client deliverables. Having worked at EP&T, Simavita Limited and Laurent Bakery over the last 14 years, Rajesh has a depth of experience in enhancing cross functionality across departments, providing strategic direction, commercial advice, continuous improvement plans and fostering strong communication with our clients.

Risks

You are encouraged to read the Prospectus carefully as it contains detailed information about the Company and the Offer. Like all investments, an investment in EP&T Global Ltd carries risk. As set out in Section 5 of the prospectus, EP&T Global Group Ltd is subject to a range of risks, including but not limited to failure to achieve profitability, failure to retain existing clients, failure to recover long term receivables from clients, increased competitive pressure, failure to meet minimum guaranteed savings levels, and failure to implement business strategy.

 

Section 734(6) disclosure: The issuer of the securities is EP&T Global Limited ACN 645 144 314. The securities to be issued are ordinary shares. The disclosure document for the offer can be obtained by clicking on the link above. The offers of the securities are made in, or accompanied by, a copy of the disclosure document. Investors should consider the disclosure document in deciding whether to acquire the securities. Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the disclosure document (which can be done via the electronic application form which will become available by clicking the bid button above).

OnMarket has a limited allocation. The offer may close early and the 'Pay By' dates may change. Duplicate bids under the same investment profile, investor name or residential address may be cancelled.

Company Releases

Prospectus 19 Mar 2021

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Using AI and IoT technology to improve energy and water efficiency in commercial real estate

 

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EP&T Global Ltd (ASX: EPX) delivers building energy management solutions that reduce energy and water wastage and improve energy efficiency within commercial real estate. The company’s platform, known as EDGE, is a fully integrated Internet of Things (IoT) technology that captures electricity, gas, thermal, water and BMS data and applies analytics to optimise the operational performance of buildings.

 

Currently providing services to over 280 buildings in 18 countries, EP&T’s clients include a broad range blue chip domestic and international property owners and operators. 

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