Investment management company Equitix has purchased around 187,000 smart meters for £291 million from Smart Metering Systems (SMS).
The portfolio belonging to Crail Meters Limited, a wholly owned subsidiary of SMS, had an average asset life of around 4.7 years and generated £18.4 million of annual index-linked recurring revenue as of 31 December 2019.
SMS says it expects to receive £282 million in total and as part of the deal it will continue to manage the devices on behalf of Equitix.
At the end of 2019, SMS had a portfolio of more than 1.2 million domestic smart meters and an order book of a further 2 million which is expected to add c.£40 million in group revenue.
Alan Foy, chief executive, said: “This transaction realises considerable cash returns and demonstrates the substantial value of our smart meter portfolio.
“It also will enable us to enhance greatly shareholder value with significant and sustainable increase in dividends – underpinned by our asset-backed, inflation-linked, recurring revenue stream.
“With a strengthened balance sheet, we will also be in a much stronger position to invest in the sizeable UK smart meter rollout programme, which is central to the establishment of a decentralised and decarbonised energy system.”
Achal Bhuwania, deputy chief investment officer for Equitix, said: “We are very pleased to participate in the UK smart metering programme whilst creating a long-term partnership with SMS.
“This acquisition aligns with our business objectives of investing in the country’s sustainable energy transition initiatives, which we are excited to be part of.”
SMS will release its full year results on 17 March.