A FTSE 250 solar firm became the latest victim of private equity plundering yesterday as it was swooped on by buyout giants KKR.
The New York-based predator agreed a £1.75billion takeover with ContourGlobal, a wholesale energy producer with 138 power plants.
It is the most recent example of private equity giants taking advantage of low interest rates and dented valuations to snap up British firms on the cheap.
Power broker: KKR has agreed a £1.75bn takeover with energy producer ContourGlobal, which has 138 power plants including solar facilities
The pandemic ushered in a wave of plundering by deep-pocketed vultures which saw historic businesses such as Asda, Morrisons and G4S fall into private hands.
Corporate raiders at KKR became notorious as the original ‘Barbarians at the Gate’ in a 1989 book of the same name about their predatory assault on US conglomerate RJR Nabisco. KKR was founded in 1976 and today manages £384billion of assets.
Its swoop on Contour is a surprise move as last year KKR’s European boss Mattia Caprioli said it was ‘not that focused on buying listed companies in the UK’, as buying private firms is easier.
Contour was founded in 2005 by current chief executive Joseph Brandt and listed on the London Stock Exchange in November 2017.
It operates solar, wind and thermal power plants across Europe, Latin America, North America and Africa. Brandt said: ‘That an institution of KKR’s repute would offer to acquire ContourGlobal is a testament to our people and their commitment.’
KKR European infrastructure head Vincent Policard said: ‘We believe that private ownership would enable ContourGlobal to invest in the business at greater scale and with more flexibility, including accelerating investments in energy transition to reach the stated net zero commitments.’
Contour shareholders will receive 263.6p per share, a 36 per cent premium to its closing price a day earlier. Its board recommended shareholders approve the offer, which is subject to a vote at a general meeting.
AJ Bell’s Russ Mould said: ‘ContourGlobal’s track record, business model and financial performance suggested the shares were too cheap.
‘It will be lowly valuation, as evidenced by the fat yield, the juicy cash flow and index-linked nature of the contracts which generate four-fifths of profit that will have attracted KKR.’
