Ovo Energy Supplier
Introduction to Ovo
Ovo, the energy supplier, is exploring options for its software arm, Kaluza, as part of efforts to strengthen its balance sheet. The company, which has almost four million retail customers, has appointed the investment bank Arma Partners to examine possibilities for Kaluza.
Kaluza’s Evaluation
Kaluza, an energy intelligence platform, is 80% owned by Ovo, with the remaining 20% owned by AGL, an Australian energy company. Industry sources suggest that Ovo is likely to aim for a valuation of Kaluza in excess of $1 billion in any new transaction. However, there are questions about the software business’s path to sustainable profitability and its pipeline of new customers.
Potential Sale of Kaluza Stake
The potential sale of a stake in Kaluza is part of a broader effort by Ovo to strengthen its financial position. Rothschild, the investment bank, has been in talks with potential investors about a plan to inject around £300 million into the company. Centrica, the owner of British Gas, has also expressed interest in exploring a deal.
Ovo’s Financial Position
Ovo is taking proactive measures to comply with Ofgem’s new capital rules and is working constructively to meet the requirements. The company recently appointed Dame Jayne-Anne Gadhia, the former boss of Virgin Money, as the independent chairman of its retail arm.
Ovo’s History and Growth
Ovo was founded by Stephen Fitzpatrick in 2009 and has positioned itself as a challenger brand, offering superior service to established industry players. The company’s transformation moment came in 2020 when it acquired the SSE retail supply arm, becoming one of the leading energy companies in the UK overnight. However, its growth has not been without challenges, particularly with regards to its relationship with Ofgem and a stream of customer complaints about overcharging.
Current Leadership
The group is now headed by David Buttress, who briefly served as Boris Johnson’s cost of living tsar after leaving the top job at Just Eat as managing director. Kaluza recently acquired Beige Technologies, an Australian energy software specialist, to strengthen its presence in the Asian-Pacific region.
