After four years of developing Finnish energy company Adven, EQT Infrastructure sold the company in January 2016. The company now stands as a textbook example of how an industrial approach to investing and a focus on sustainability can provide value to both investors and society.
When EQT Infrastructure identified the opportunity to merge two leading sustainable energy suppliers in Finland and Estonia in 2012, it saw a business that would tick a lot of boxes. The new entity – rebranded Adven – had potential for value creation through EQT’s industrial model, provided essential services to society, and had stable and predictable cash-flows through long-term customer contracts.
“In Adven, we saw significant growth potential, particularly in supporting the transition from fossil fuels to biofuels. Not only can this provide significant returns for EQT investors, but it is also very beneficial for society – when Adven grows, so does the use of sustainable energy sources,” says Päivi Arminen, Director at Investment Advisor EQT Partners.
Applying the industrial model
Following the merger, Adven, through partnering with EQT Infrastructure, was able to benefit from both the local team’s experience of the industry, as well as the wider network and connections of EQT across the Nordics. Adven grew both organically, through continued investment in environmentally friendly energy infrastructure, and through selected add-ons, with a total capital expenditure of over EUR 120 million.
As part of the expansion, Adven also successfully entered the Swedish market and widened its offering to include complementary services such as geothermal and industrial energy efficiency solutions, thus creating additional growth avenues.
“EQT’s knowledge of the local energy market and wider network of connections were vital in opening doors during our expansion and enabled us to make selective add-on acquisitions,” says Matti Viljo, CEO at Adven.
EQT also worked together with management to encourage a greater focus on customer needs, bolstering Adven’s existing commercial mindset and high-performance culture. In addition, the management team and the governance of the company was reinforced, and core business processes improved.
“I am very impressed with how EQT worked with us to strengthen Adven. EQT enabled our growth and transformation, while still leaving room for us in management to implement the strategy,” says Matti Viljo.
Another key aspect in Adven’s transformation was its board of directors, which EQT sourced through its proprietary network of over 250 independent Industrial Advisors.
“By appointing EQT Industrial Advisors to the company’s board, we were able to add more experience to the team than a company of Adven’s size is normally able to attract. In particular, the board brought relevant experience both from the energy sector as well as a customer perspective,” says Päivi Arminen.
Overall, under EQT’s ownership, Adven performed considerably ahead of plan.
A sustainable core
As a leading supplier of energy with low environmental impacts, sustainability is at the very core of Adven’s business model – the company is constantly investing in, and developing ways of using, biofuels, waste materials and waste heat. As such, its success is directly linked to the strong and growing sustainability trend, benefiting all stakeholders, from its investors, to its employees and wider society.
But EQT’s focus on sustainable investing also meant it was able to transform Adven in a way that improved the company’s own sustainability. During EQT’s ownership employee numbers grew by 50%, but there was a more than 35% decrease in Adven’s own CO2 emissions. This in turn reduced customers’ carbon footprints. Once again, what was good for business was good for wider stakeholders.
In January 2016, four years after EQT’s investment, Adven was sold to a consortium comprising of AMP Capital and Infracapital, proving that sustainability is good business.