Former U.S. VP Al Gore Backs Ovo Energy by Investing £8 Million Before IPO
By Vittorio Hernandez | August 29, 2014 9:24 AM EST
Showing that he practices what he preaches, green advocate and former U.S. Vice President Al Gore invested £8 million in Ovo Energy. The investment comes before one of the fastest-growing new power suppliers in the UK launches its initial public offering (IPO).
Ovo differentiates itself from competitors by offering renewable energy, using two tariffs. Its energy are sourced from wind farms in Gloucesterhsire and North Wales and from burning of landfill gas.
The investment, raised in growth capital through Gore's sustainable investment fund Generation Investment Management, was completed in January.
With Gore's investment, considered the largest investment deal in the energy firm's history, the former VP becomes a minority shareholder in the company established in 2009 by Stephen Fitzpatrick to challenge the Big Six energy companies.
"The most important thing for us was that we didn't have to give up any control. We had previously turned down a deal with a private equity investor as we were being asked to give up too much control relative to the stake we were selling," Fitzpatrick told The Telegraph.
The investment will be used to expand Ovo's technology operations, develop new products and improve its management team in the run up to the IPO within the next 18 months. Ovo targets to raise £25-£35 million.
Fitzpatrick said the flotation aims to raise money to fund new opportunities and to provide liquidity to Ovo's 500 plus workers via share options. He added that Ovo has tripled in size the past 12 months as customer base as of October 2013 hit 400,000 from 150,000.
Ovo was voted in 2011 at the Which? Switch consumer survey as the Top Energy Provider in the UK when it received high scores from consumers for customer service, bill clarity and accuracy, and value for money. Its total score was 77 per cent. However, in 2013, Ovo's score went down to 74 per cent and it finished fifth place, resulting in the energy firm's five-star rating downgraded to four stars.
Due to the offer by Ovo and other smaller energy suppliers, more than two million customers left the Big Six, made up of British Gas, EDF Energy, E.ON, npower, ScottishPower and SSE. However, the Big Sill still supply 95 per cent of the energy requirements of UK households, although the switch helped consumers save an average of £200 on their bills.
The Ovo IPO will likewise give retail investors a chance to support green energy producers, besides leaving the Big 6. But the desire to support worthy pro-environment companies should also be balanced by wise financial decision-making.
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