£1bn EV Aurora Energy Research - an Energy & Commodities Data & Analytics growth monster coming to market in 2025
TL;DR - The competition to acquire Aurora will be intense.
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On Friday in our M&A analysis column we wrote a short piece about the news that Aurora Energy Research, currently backed by CGE Partners, will likely come to market in 2025.
We promised that we would take a deeper look at Aurora for you. So here goes.
Some detail on Aurora
Energy & Commodities is one of the most valuable Data & Analytics sub-sectors. So it’s no surprise that businesses proliferate here. The ever-growing Asymmetrix database currently includes c.250 Energy & Commodities Data & Analytics providers.
We’ve profiled Vortexa, Benchmark Mineral Intelligence, and the Carbon Credit Rating Agencies before, and touched on many others in our weekly M&A news analyses.
What’s remarkable about Aurora is the speed at which it has grown.
As ever with private companies it’s difficult to get accurate financial information but it seems that Aurora’s growth looks something like this (there is a fair amount of estimating going on here…)
If it carried on along the same trajectory, Aurora would reach roughly GBP150 in revenues and 1,200 employees in 12 months’ time…
All this suggests that a GBP1bn valuation may be conservative. As we saw with Preqin, which was rumoured to be selling for “more than GBP1bn” only a few days before selling for GBP2.55bn, when a high growth premium Data & Analytics asset of strategic importance to acquirers comes to market, valuations can reach the far right of the football field.
How has this growth been achieved?
Unusually for a PE-backed business, all of Aurora’s growth has been organic. There has been no M&A.
Instead, Aurora has grown through:
Product Development - for example, the Chronos Battery Valuation Analytics product was launched in November 2023; and the Origin Power Market modelling product was launched in October 2021;
Geographic Expansion - Aurora has expanded its coverage globally, whilst simultaneously becoming even more granular in its core European market. For example, AMUN Brazil launched last week, and Chronos launched in Spain and Portugal in June;
Sales - it’s difficult to gather exact data here (we are planning to gather data for our clients which should provide greater visibility), but we can assume that a good amount of the increased employee headcount came in the sales team. Likewise, as with any must-have Data & Analytics provider, you can expect that price increases also drove a good proportion of the growth.
Who might acquire Aurora?
Judging from recent M&A activity at this size range the list of names to be invited to the bake-off may well include Jefferies, Citi, Evercore, JPMorgan, Lazard and Goldman Sachs.
Whichever banks ends up winning the sellside mandate, the team running the process is likely to be incredibly busy. There will be no shortage of interest.
Here are a few suggestions for who may end up acquiring Aurora.
Strategics
S&P Global - their strategic vision details “actively pursue key growth area - Sustainability and Energy Transition”;
Bloomberg - would be an excellent fit wit their New Energy Finance business;
RELX - ICIS and Aurora would be a good combination.
Sponsors
This could be a very long list - as we said last week, any upper-mid-market PE firm worth their salt will want to take a look at the CIM.
Here are a few of the most likely parties:
Hg - having sold their final position in Argus Media in January this year, both Chris Fielding (the lead investor at CGE in 2020) and Tara Anand Carter (Aurora’s advisor at Houlihan Lokey in 2020) will undoubtedly be interested in the potential to use Aurora as a new Energy & Commodities Data & Analytics platform;
BeyondNetZero/General Atlantic - recently backed GRESB. Have a stake in Argus Media;
EQT - previous investments in Data & Analytics (such as Bureau van Dijk) performed very well for them;
KKR - investors in numerous Data & Analytics businesses, including Accuris, Cotiviti and Lightcast;
Carlyle - investments in ZoomInfo and Exiger among others;
Astorg - know the Energy & Commodities space well through their investment in Fastmarkets;
Warburg Pincus - one of the longest standing investors in Data & Analytics, Warburg Pincus previously backed RS Energy, now part of Enverus.
Who might an acquirer combine Aurora with to make it into an even bigger business?
Again, there are plenty of candidates, but here are a few thoughts of deals which could move the needle for the next owners of CGE:
Wood Mackenzie - backed by Veritas, who acquired it from Verisk, it would make a lot of sense to put these two businesses together;
Rystad Energy - roughly the same size as Aurora and privately owned by its founder and CEO Jarand Rystad with minority shares owned by senior staff of the company;
Energy Exemplar - acquired by Blackstone and Vista Equity Partners in October 2023 from Riverside for roughly $1bn. Focus mainly on energy market modelling software;
Montel AS - backed by Riverside, and about a third of the size of Aurora, it would be a good fit with its focus on energy and electricity market information for energy producers, grid operators, financial institutions, trading firms and industrial end-users;
Enverus - backed by Hellman & Friedman (Genstar have a minority stake), adding Aurora would give the platform greater scale in Power & Renewables and diversify away from fossil fuels. Rumour has it that H&F is currently exploring a dual-track process for Enverus, which passed $500m in revenues in 2023, valuing the business at more than $5bn.
If you would like to discuss this or any other deal in Data & Analytics, please drop Asymmetrix a line to let us know your thoughts.