The newest entrant to the group of companies which dominate Britain’s retail energy market is to raise £300m from a share sale as it pursues further international expansion and further investment in its technology platform.
Sky News has learnt that OVO Energy has asked investment bankers to approach prospective investors willing to acquire shares in the company at a valuation of between £2bn and £3bn.
The capital-raising will be the first since Japan’s Mitsubishi Corporation bought a 20% stake in OVO early last year.
Image: OVO became the UK’s second largest energy supplier when it bought SSE’s retail business
Nomura GreenTech Capital Advisors and Barclays have been appointed to work on the transaction, insiders said on Tuesday.
The share sale will underpin OVO founder Stephen Fitzpatrick’s vision of creating a British sustainable energy and technology titan as governments, regulators and major companies attempt to meet net zero carbon targets in the coming decades.
OVO already has a presence in Australia, France and Spain, and wants to expand into other international retail supply markets.
The company also recently announced a partnership with the Italian group Eni gas e luce to deploy smart energy solutions through its Kaluza system.
Kaluza is an intelligent energy platform which helps to optimises power usage by using artificial intelligence and machine learning, as well as simplifying vast quantities of data to improve networks’ efficiency.
Mr Fitzpatrick said recently: “Transitioning towards a clean energy system is the greatest challenge we face in the 21st century.
“€500bn of investment is planned in Europe over the next decade to tackle climate change alone.
“To succeed, we will need to develop new technology and to redesign the energy system around the customer.”
Banking sources said the OVO fundraising was likely to draw a broad range of interest from energy and infrastructure groups as well as technology investors and pension funds.
Image: Ovo has 1.5 million household customers
OVO has grown rapidly since being established by Mr Fitzpatrick in 2009.
Its most significant deal to date was its acquisition of SSE’s residential energy business in January.
The transaction, which had an enterprise value of £500m, transformed the scale of OVO’s retail operations and saw it take on the seller’s 8,000-strong workforce.
In May, it said it would cut 2,600 jobs in the wake of the merger.
Last month, the company confirmed that it was appointing Jonson Cox, the chairman of Britain’s water regulator, as a non-executive director of its retail board.
His recruitment added one of the UK’s most experienced infrastructure and utility executives to OVO Energy’s board.
Mr Cox also bring crucial regulatory experience to the company during a period when energy suppliers are under intense scrutiny from industry watchdogs.
In January, OVO was fined nearly £9m by Ofgem for issuing inaccurate statements to half a million customers between 2015 and 2018.
The new OVO Energy board, which is chaired by former Harvey Nichols boss Stacey Cartwright, encompasses customer-facing brands including the Boost, Spark and CORGI Homeplan operations.
OVO’s other shareholders include the private equity firm Mayfair Equity Partners.
Its fast-growing rivals in the UK retail energy sector include Octopus Energy, which has also sold a big stake to overseas investors in recent months.
OVO declined to comment on its planned fundraising.