Target Information

Last Mile Infrastructure (Last Mile), recognized as one of the UK’s leading Independent Network Owners, has established a strategic partnership with Rendesco, a specialist in heat pump technology. This collaboration aims to create a joint venture named Last Mile Heat Networks (LMHN), focusing on the development of ground source and water source heat pumps. This initiative offers housebuilders throughout the UK an environmentally sustainable and efficient heating solution for residential properties.

Last Mile is engaged in the design, installation, ownership, and operation of multi-utility networks, including gas, electricity, water, and wastewater services, alongside smart metering solutions for new builds. The company oversees over 400,000 connections supporting both residential and commercial clients, with a robust contracted order book comprising approximately 390,000 connections. It operates as a part of Infracapital, the infrastructure equity investment division of M&G.

Industry Overview

The UK heat pump market has gained significant traction in recent years, spurred by governmental policies aimed at reducing carbon emissions and promoting sustainable energy solutions. The UK government has set ambitious targets, such as achieving net zero carbon emissions by 2050, leading to increased investments in renewable energy technologies, including heat pumps. This sector is poised for growth as more builders and developers recognize the importance of low-carbon heating systems.

Rendesco, as an industry leader in this space, plays a vital role in the evolving landscape of renewable heating solutions. Established in 2012, the company has become one of the preeminent installers of ground source heat pumps (GSHP) within the UK, featuring over 400 bespoke installations, complemented by its status as the largest owner and operator of GSHP systems across the country. With more than 66MW of renewable heating capacity, Rendesco’s expertise continues to position it at the forefront of the market.

This joint venture aligns perfectly with industry trends, where sustainability is becoming an essential component for property developers. The reliable and efficient nature of heat pump technology makes it an attractive choice for both residential and commercial projects. Furthermore, as energy costs fluctuate, the demand for efficient heating solutions continues to rise, solidifying the necessity for strategic partnerships within the sector.

As UK builders pivot towards greener solutions, alliances like LMHN are crucial in simplifying the integration of heat pumps into new housing developments. By capitalizing on the growing demand for environmentally-friendly energy solutions, LMHN is well-positioned to support the industry's transition towards sustainability, enabling developments that meet both customer needs and regulatory expectations.

Rationale Behind the Deal

The formation of Last Mile Heat Networks (LMHN) is a strategic maneuver that enhances Last Mile’s offerings by incorporating sustainable energy infrastructure. By leveraging Last Mile’s established connections with housebuilders and property developers, the joint venture can provide comprehensive solutions that align with the UK government’s environmental goals. This collaboration not only enables Last Mile to expand its services, but also facilitates a reduction in carbon footprints for the properties they support.

For Rendesco, this joint venture represents a pivotal opportunity to leverage Last Mile’s extensive network to broaden its market reach. As a premier provider of renewable heating solutions, partnering with Last Mile allows Rendesco to enhance its presence in the evolving UK energy market, ultimately fulfilling its growth ambitions in delivering heat as a service for commercial and residential entities.

Investor Information

Last Mile Infrastructure Group stands as a prominent entity within the UK independent network ownership landscape, owning and managing a diverse portfolio of utility connections. With experience spanning the financing and operation of various infrastructure types—from gas and electricity networks to wastewater systems—it has established a reputation for excellence in service delivery and operational reliability. Under the backing of Infracapital, Last Mile aims to develop long-term, sustainable assets that fulfill the needs of its clientele.

Meanwhile, Rendesco’s leadership in heat pump technology positions it as a key player in the renewable energy domain. Headquartered in Cheltenham, Rendesco boasts a dedicated team focused on innovation in the heating sector. Its robust track record underscores the effectiveness of heat pumps in residential and commercial applications, encapsulating a commitment to delivering quality installations and client satisfaction.

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The joint venture between Last Mile and Rendesco presents a compelling investment opportunity within the burgeoning market for sustainable energy solutions. With the UK's commitment to achieving net-zero emissions by 2050, investments in renewable heating technologies are not only timely but necessary. The strategic benefits of this partnership cannot be overstated, particularly in terms of shared expertise and market reach.

LMHN's focus on combining Last Mile’s established relationships with Rendesco’s innovative capabilities creates a competitive advantage. As property developers increasingly seek to comply with environmental regulations and customer preferences for greener options, LMHN will be well-positioned to provide tailored heat pump infrastructure solutions, capturing a significant share of the market.

Moreover, this collaboration underscores the growing importance of integrating renewable energy into traditional energy sectors. By expanding their service offerings, both companies can better address the challenges associated with climate change, while simultaneously generating positive economic outcomes through sustainable practices.

In summary, LMHN is poised for success not only because of its innovative service offerings but also due to the conducive regulatory environment favoring renewable energy. This joint venture is likely to yield substantial dividends for both Last Mile and Rendesco, while contributing positively to the UK's transition toward a greener future.

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