Target Information

Hg has successfully executed the sale of QUNDIS, a leading provider of sub-metering solutions in Europe, to German investment group KALORIMETA (KALO), a prominent service provider in climate-smart solutions within the building sector. Hg intends to retain a minority stake in the newly formed group. QUNDIS was established in 2008 through the merger of QVEDIS, which was previously part of Siemens, and KUNDO SystemTechnik. Currently, the company is headquartered in Germany and employs over 250 individuals.

QUNDIS specializes in a wide array of sub-metering and communication devices that accurately measure, collect, and transmit data on heat and water consumption at the household level. Their solutions cater to both independent sub-metering suppliers and the building technology markets in Europe. Sold across 30 countries, QUNDIS’ primary markets include Germany and Italy.

Industry Overview in Germany

The sub-metering industry in Germany has experienced significant transformation in recent years, driven by regulatory changes and increasing consumer demand for accurate consumption data. The European Energy Directive mandates the use of consumption-based billing, which serves as a key driver for the uptake of sub-metering solutions. This regulatory requirement has paved the way for companies like QUNDIS to thrive, facilitating greater transparency and efficiency in energy consumption.

Furthermore, the market for smart buildings is rapidly evolving as property owners seek to enhance operational efficiency and reduce environmental impact. Intelligent building technologies, including advanced sub-metering solutions, are increasingly being integrated into existing infrastructure. This shift represents a lucrative opportunity for companies in the sector to expand their service offerings and increase their market share.

In addition to regulatory support, the rise of climate consciousness among consumers has intensified the focus on energy efficiency. Homes and businesses are prioritized not only for their energy savings but also their contribution towards sustainability goals. As a result, companies that innovate in the sub-metering space—providing reliable, user-friendly solutions—are likely to find a warm reception in the market.

The digital transformation within the industrial and services sectors in Germany aligns with the overarching trend towards automation and connectivity. This advancement drives the demand for integrated solutions that QUNDIS is well-positioned to offer, bolstering its growth in the competitive marketplace.

Rationale Behind the Deal

The decision to sell QUNDIS stems from Hg's overall strategy to capitalize on robust returns while simultaneously aligning with a partner capable of enhancing the company’s offerings. With the acquisition by KALORIMETA, QUNDIS can leverage shared expertise to expand its product lines further, which is mutually beneficial for both parties involved in the merger.

Hg's investment in QUNDIS, initiated in May 2012, has yielded significant returns, translating to an investment multiple of 3.5x and an internal rate of return (IRR) of 30%. The successful execution of this exit aligns with Hg’s commitment to delivering strong performance outcomes for its stakeholders.

Information about the Investor

Hg is a reputable investment firm renowned for its focus on technology-driven businesses across the industrials, services, and TMT sectors in the German market. With a robust track record spanning two decades, Hg has built a portfolio that emphasizes investing in 'hidden champions'—companies that hold strong market positions yet might lack visibility on the world stage.

The Munich-based team at Hg has demonstrated exceptional acumen in navigating the landscape of private equity investments, evidenced by multiple successful exits over the past year, including key transactions that have resulted in substantial returns. Their strategic insight and operational expertise have contributed significantly to the value creation in their portfolio companies.

View of Dealert

From an investment perspective, the sale of QUNDIS represents a strategically sound decision by Hg, signaling a culmination of a successful investment journey. The ability to generate a 3.5x investment multiple, along with a 30% IRR, underscores the value created during Hg's stewardship of QUNDIS. The partnership with KALORIMETA presents a promising opportunity, enhancing QUNDIS’ growth prospects through collaborative synergies.

Moreover, the anticipated upward trajectory of demand for sub-metering solutions bolstered by regulatory frameworks positions QUNDIS well within the marketplace, making this acquisition particularly favorable for KALORIMETA. The combined strengths of KALORIMETA and QUNDIS set the stage for compelling service offerings that could redefine market standards in climate control and energy efficiency solutions.

As Hg continues to pursue future investment opportunities, the successful exit of QUNDIS serves as a testament to their rigorous investment strategy and operational diligence. Moving forward, the anticipated realisations from Hg6 fund will likely continue this trend of delivering significant returns to investors, reinforcing Hg’s position as a leader in private equity investing in the German market.

In summary, the sale of QUNDIS is indicative of a well-timed and calculated decision that could yield substantial returns for all parties involved. With the increasing value placed on sustainability and efficient energy management, this investment positions both QUNDIS and KALORIMETA for robust growth in the future.

View Original Article