Legence For Sale or IPO? Blackstone Considers Sustainability Consultancy Options, Report Says

Private equity and asset management firm Blackstone is exploring a potential IPO or asset sale involving Legence, a major sustainability consultancy focused on the built environment, Bloomberg reported.

An exit or IPO could value Legence at roughly $5 billion including debt, the report said. Neither Legence nor Blackstone commented on the report.

The most likely scenarios likely involve Blackstone retaining, recapitalizing, or selling Legence to another PE-type firm, Sustainable Tech Partner believes.

A potential (initial public offering) seems less likely, in our opinion. Our reasoning: The overall IPO has reopened a bit in 2024 after minimal interest in 2023. Some of the IPOs have involved later-stage SaaS technology companies such as Rubrik. In contrast, it's unclear how public markets would react to a sustainability-focused IPO amid a U.S. election year that may catapult climate change skeptic Donald Trump back into the White House.

Sustainable Consulting: Business History, Company Evolution

Legence, previously known as Therma Holdings, launched in 1967. Blackstone acquired the business from Gemspring Capital in 2020. Blackstone rebranded Therma to Legence in June 2022.

Legence now positions itself as an Energy Transition Accelerator -- providing energy efficiency and sustainability solutions for the built environment. Among the key data points to note, Legence has:

• maximized "the efficiency of more than 5.5 billion square feet across 22,000+ buildings."
• "designed more than 10 million square feet of net zero buildings, and more than 140MW of onsite renewable energy projects."
• played a role in more than 1,000 certified green building projects, including LEED, WELL Building Standard and Fitwel.

Here are 10 things to know about Legence, according to the company.

Legence has extensive M&A experience. Indeed, Legence acquired six businesses in 2023. The most recent deal involved buying Corporate Sustainability Strategies in May 2024.

Building Energy Management, Carbon Reduction: Market Opportunity

Speculation about Legence's ownership status surfaces at an opportune time for the consulting firm and potential suitors. Indeed, cities and countries worldwide are launching regulations that will force building owners and real estate investors to decarbonize their commercial and residential assets.

Examples include:

• Boston's Building Emissions Reduction and Disclosure Ordinance (BERDO);
• New York Local Law 97;
• a large buildings emissions law in Seattle, Washington; and a
• Future Homes Standard in the United Kingdom.

Meanwhile, demand for building energy management systems appears steady to strong, depending on which market forecast you potentially believe. For instance:

• The global building automation and control system market will reach $168.8 billion by 2031, up from $87.3 billion in 2022, Transparency Market Research forecast. That's a compound annual growth rate (CAGR) of 7.9%, the firm said.
• Spending on building management systems is expected to reach $19.25 billion in 2023, up from $6.65 billion in 2016. That's a 16.7% compound annual growth rate (CAGR) during the forecast period, according to MarketsAndMarkets. 

The U.S. government also is assisting the market. For instance, the federal government plans to spend $250 million to help federal agencies implement net-zero building projects.

We'll continue to watch Legence for potential business and ownership updates.