Green assets could be the latest trend in private equity as global firm Partners Group has acquired a majority equity stake in Energy-as-a-Service (EaaS) company Budderfly.
Partners Group's involvement comes after the departure of Edison Partners, which first invested $22 million in Budderfly in 2017. Edison also participated in follow-on rounds in 2019. Before this transaction, Budderfly had raised $82 million since its founding in 2007. Now, Partners has committed to investing $500 million in the EaaS company.
Budderfly offers services that include the measurement and management of energy demand and consumption. They also help companies such as retailers, assisted living facilities, franchises, and restaurants reduce their carbon footprints and streamline their energy usage. Additionally, they have a unique utility billing interface that is compatible with over 400 utility companies across North America. Their model also involves offering a sort of energy portfolio to their 2,700 clients across 49 states.
Sustainability and decarbonization are the ways of the future, says Todd Bright, a Partner and the Head of Private Infrastructure Americas for Partners Group. As companies are facing scrutiny from investors about their deliverables regarding climate change, acquisitions like Budderfly are beneficial for all parties involved. And Partners Group isn't the only organization interested in energy-focused investments. Private equity behemoth Blackstone committed $400 million to strategic investment in Xpansiv, a global marketplace platform for environmental commodities such as "energy credits" or voluntary carbon offsets.
Some maintain that moderating climate change isn't just private equity's latest investment—it's also their responsibility. Author and Environmental, Social, and Governance (ESG) expert Robert Eccles tells the Harvard Business Review that private equity's economic footprint is so large that they need to participate in influencing any lasting change. He adds that emerging as an ESG leader should be a priority for any firm looking to boost their reputation, benefit asset owners, and make a positive impact on the world.