|
|
|
|
Spark Energy: M&A Targets Range From Tuck-Ins to Companies Equivalent to Spark's Size
Spark Energy's new framework to support M&A activity is intended to support larger acquisitions, though the company remains open to pursuing acquisitions ranging from tuck-ins to books that are the same size as Spark, CEO Nathan Kroeker said during an earnings call.
As first reported by EnergyChoiceMatters.com on Friday, Spark Energy announced that it is developing a framework with NuDevco Partners Holdings, LLC, which is owned by Spark's founder, that would enable Spark to pursue additional growth through M&A.
The framework with NuDevco could enable Spark to utilize NuDevco's balance sheet to acquire and consolidate energy retailers with certain guaranteed earnings protections and debt financing in the form of convertible subordinated debt bearing interest at market rates
Kroeker said the framework resulted from opportunities to acquire "larger businesses" in the retail market.
"In order to take advantage of these opportunities we are developing a framework with NuDevco Partners Holdings, LLC, which is owned by our founder, that will enable us to utilize NuDevco's balance sheet to acquire and consolidate energy retailers that we may otherwise not have the ability to do. We are finalizing this framework with one specific target which NuDevco plans to acquire and, similar to an MLP structure, could then offer to us with certain guaranteed earnings protections and debt financing in the form of convertible subordinated debt," Kroeker said.
Kroeker said that, if finalized, NuDevco would be used for acquisitions above a certain threshold, as the framework does add some complexity to deals. If there is a small tuck-in acquisition available, Spark will continue to execute those itself.
"But on larger deals, we think this [NuDevco framework] is going to be very helpful," Kroeker said.
Spark is in various stages of due diligence with several potential M&A targets
Regarding M&A, Kroeker said, "in terms of what we are seeing and what we have an appetite for, it's everything from the small tuck-ins that we announced in Q4, all the way up to businesses that have RCE counts that would be similar to our own. So, it's a broad range of opportunities out there."
As noted in our related story today (click here), Spark has 326,000 RCEs as of December 31, 2014.
Kroeker cited three drivers for acquisition opportunities:
"[T]his industry has a lot of new entrants in it all the time and you always have companies that are coming in, growing a book of customers and then looking to sell it and get out and go do it again. So, there's a lot of smaller players that are out in the market looking to sell their books for that reason. The polar vortex last year put some strain on some of the smaller players, those that were not well capitalized, so a lot of the opportunities are coming under that. And then you have some folks that looked at that, and said they just don't have the stomach to do that again and want to get out while they can. So, it's typically one of those reasons."
See Related Story Today: After Learning "Hard Lesson" in SoCal Gas Market, Spark Energy Expects to Return To Customer Growth in Q2
ADVERTISEMENT Copyright 2010-15 Energy Choice Matters. If you wish to share this story, please
email or post the website link; unauthorized copying, retransmission, or republication
prohibited.
March 30, 2015
Email This Story
Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Operations Analyst -- Retail Supplier
• NEW! -- Analyst, Residential Pricing and Analysis -- Retail Supplier -- Houston
• NEW! -- Senior Energy Markets Pricing Analyst
• NEW! -- Regional Sales Manager --Retail Provider -- Dallas, TX
• NEW! -- Electricity Analyst -- Retail Supplier
• NEW! -- Natural Gas Pipeline Scheduler -- Retail Supplier
• NEW! -- Business Development - Energy Advisor -- Houston
• NEW! -- Billing & Transaction Analyst -- Houston
• NEW! -- Associate Counsel, Regulatory Affairs -- Retail Supplier
• NEW! -- Marketing Director -- Retail Supplier
• NEW! -- Energy Supply Trader - Retail Supplier -- Houston
• NEW! -- Sales Director -- Retail Supplier -- New York
• NEW! -- Sr. Pricing Analyst -- Retail Supplier -- Houston
• NEW! -- Business Development Manager – Broker Sales -- Retail Supplier -- DFW
|
|
|