Nippon Gas hopes to put the spark back into COzero
Nippon Gas has bought about a sixth of COzero to help the Sydney-based firm develop its energy efficiency product EnergyLink, COzero's chief executive, Nick Armstrong, said.
"It's going to position us for an [initial public offering] in the next 12-24 months," he said. "They came on as a cornerstone investor in anticipation of that."
The IPO, which would target a market value of $80 million to $90 million, would help further diversify COzero away from a reliance on trading of carbon and energy-efficiency certificates.
As with many firms in the industry, shifting policies created boom-and-bust conditions for COzero. The Coalition's plan to scrap a price on carbon entirely will only extend the era of uncertainty.
Founded in 2007 using credit cards, COzero saw revenues soar by an average of 604 per cent in the three years to June 2011, earning it top slot on BRW's Fast 100 list 2011. Mr Armstrong was also the youngest debutant on the BRW Young Rich List that year, sharing a fortune the magazine pegged at $22 million with partner Geoff Alexander.
Growth stalled, though, and the company had to cut staff to stay afloat. But those efforts have paid some dividends, with the firm generating $4 million in after-tax profit last business year, Mr Armstrong said.
He said the company's appeal to Nippon Gas was its use of new energy-smart products that allow clients better real-time monitoring of electricity use and to identify areas where power consumption can be made more productive.
"Energy efficiency is looking like being the next energy super cycle," he said.
While Nippon Gas will provide expertise to the venture, it will also be looking to take some of the technology home as firms in Japan battle with energy shortages in the wake of the continuing Fukushima nuclear reactor disaster.
"The Japanese, because of the nuclear crisis, are really looking for anyone who can apply technology to help use energy a bit smarter," Mr Armstrong said.
Frequently Asked Questions about this Article…
Nippon Gas bought about a sixth of COzero and is described as a cornerstone investor. For everyday investors, that matters because the deal brings capital and industry expertise to COzero as it scales its EnergyLink product and pursues an initial public offering.
Yes. COzero’s chief executive, Nick Armstrong, said the company is positioning for an initial public offering in the next 12–24 months, targeting a market value of roughly $80 million to $90 million.
EnergyLink is COzero’s energy-efficiency product that helps clients monitor electricity use in real time and identify where power consumption can be made more productive. The company says this kind of energy-smart technology attracted Nippon Gas and could drive future growth as energy efficiency becomes a larger market theme.
COzero was founded in 2007 and experienced rapid revenue growth—an average 604% increase in the three years to June 2011—which put it at the top of BRW’s Fast 100 list in 2011. Founder Nick Armstrong was also named on the BRW Young Rich List that year.
After a period of stalled growth that forced staff cuts, COzero reported a turnaround with about $4 million in after-tax profit in the last business year, signaling improved financial stability ahead of its planned IPO.
A key risk is policy-driven volatility: COzero has relied partly on trading carbon and energy-efficiency certificates, and shifting government policies—such as the Coalition’s plan to scrap a price on carbon—create boom-and-bust conditions and ongoing uncertainty for the business.
Nippon Gas is expected to provide expertise to the venture and may adopt some of COzero’s technology in Japan, where firms are seeking energy-smart solutions following energy shortages related to the Fukushima nuclear crisis.
COzero’s management describes energy efficiency as a potential 'next energy super cycle.' Products like EnergyLink that improve real-time monitoring and productivity of electricity use could see growing demand, especially where companies and utilities face energy supply challenges.
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