Information on the Target

Also Energy Holdings Inc. (“AlsoEnergy”) is a premier provider of solar monitoring software, integrated controls, and edge solutions, focusing on Distributed Generation and Utility customers throughout the United States. Since its collaboration with Clairvest Group Inc. in August 2017, AlsoEnergy has executed an effective growth strategy, which included the acquisition and integration of three strategically aligned companies. This journey has enabled the company to expand its global footprint and enhance its service offerings through continued innovation.

The leadership team at AlsoEnergy consists of co-founders Robert Schaefer and Holden Caine, who have successfully navigated the company through numerous opportunities and challenges. Schaefer has highlighted the excitement surrounding AlsoEnergy's future following its agreement to merge with Stem, Inc., especially given Stem's solid market position in the burgeoning sectors of storage and digitization.

Industry Overview in the U.S.

The solar energy industry in the United States has witnessed remarkable growth in recent years, driven by technological advancements, decreasing solar panel costs, and increased consumer demand for renewable energy sources. Policymakers at both federal and state levels have been active in promoting solar adoption through incentives and rebates, creating a conducive environment for companies like AlsoEnergy to thrive.

Additionally, the increasing emphasis on climate change and sustainability has prompted utilities and businesses to transition towards cleaner energy sources, resulting in an uptick in demand for solar monitoring and control systems. This paradigm shift has opened up various avenues for growth for industry participants involved in the development and implementation of solar technologies.

Furthermore, the rise of Distributed Energy Resources (DERs) has transformed how energy is generated and consumed. As more customers adopt solar energy systems, there is a growing need for sophisticated management and analytical tools like those offered by AlsoEnergy, optimizing energy usage and enhancing operational efficiency.

As the U.S. continues to lead in solar energy installations, there is immense potential for further innovation and development within the industry. Companies that effectively leverage technology are poised to capitalize on the ongoing transformation to a decentralized energy model.

The Rationale Behind the Deal

The strategic sale of AlsoEnergy to Stem, Inc. aligns with Clairvest's objective of partnering with capable entrepreneurs to build significant businesses. Clairvest and their partners believe that this transaction represents an opportunity for both companies to enhance their growth trajectories by combining their complementary strengths. Stem's leadership in the energy storage and digitization market makes it a fitting partner for AlsoEnergy's expansive suite of solar solutions.

Clairvest anticipates that this transaction will yield substantial long-term returns for its investors, mainly through cash and equity in Stem, which is expected to further appreciate in value post-acquisition. By combining forces, both AlsoEnergy and Stem can benefit from improved operational efficiencies and market synergies.

Information about the Investor

Clairvest Group Inc. (TSX: CVG) is a Canadian private equity firm specializing in investing in growth-oriented businesses across various sectors. The firm has a reputation for its domain-focused investment strategy, emphasizing collaboration with management teams to drive significant value creation. Clairvest’s expertise in energy transition investments has been evident throughout its partnership with AlsoEnergy, and its leaders have been actively involved in steering the company towards market leadership.

Ken Rotman, CEO & Managing Director of Clairvest, has played a pivotal role in shaping the firm’s investment philosophy, which is centered around building strategically significant businesses. Under his leadership, Clairvest seeks to create value not only for its investors but also for the businesses it partners with, fostering a spirit of collaboration and growth.

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The transaction between Clairvest and Stem for AlsoEnergy represents a highly strategic move within the rapidly evolving solar energy sector. With the increasing focus on sustainability and renewable energy, AlsoEnergy's software offerings position it well within a marketplace ripe for expansion. The merger has the potential to create significant synergies between the two companies, leveraging Stem’s innovative storage solutions and AlsoEnergy's robust software capabilities.

From an investment perspective, this transaction appears favorable for Clairvest and other stakeholders. The projected sale proceeds of approximately US$350 million, combined with the potential appreciation of Stem's shares, reflect a lucrative exit strategy for Clairvest. This indicates a solid return on investment and reinforces Clairvest's approach to identifying and nurturing high-potential companies.

Additionally, the partnership between AlsoEnergy and Stem aligns with market trends favoring integrated energy solutions, which are increasingly essential in a grid that is becoming more complex. This could lead to more comprehensive service offerings and improved customer experiences, positioning both entities for sustained success.

In conclusion, the sale not only presents a strategic opportunity for growth and expansion but also exemplifies Clairvest’s commitment to building value through well-considered investments in the burgeoning renewable energy sector.

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