M&A: Private Equity Firm Apax Partners Acquires Climate Tech Consultancy IES

Private equity firm Apax Partners has acquired Integrated Environmental Solutions (IES), a technology solutions provider, consulting firm and digital twins specialist that helps customers to decarbonize buildings, communities and cities. Financial terms of the deal were not disclosed.

This is M&A deal number 107 that Sustainable Tech Partner has covered so far in 2024. See all M&A deals involving sustainability, climate tech and green IT services listed here.

We're checking to see if this is a potential "platform" acquisition -- which would mean Apax plans to tuck additional acquisitions into IES. Still, we don't know if that's the potentail strategy.

Apax Partners Acquires IES: Business Details

Apax Partners, founded in 1972, is based in London, United Kingdom. Th global private equity advisory firm has raised more than $65 billion since inception. The Apax Funds invest in companies across four global sectors:

• Internet/Consumer;
• Tech;
• Services; and
• Healthcare.

Integrated Environmental Solutions (IES), founded around 2004, is based in Glasgow, Scotland. Key areas of expertise include digital-twin technology. Indeed, the company knows how to create a live Digital Twin that :responds and behaves like its real world counterpart," IES asserts. We don't know if IES uses home-grown software or third-pary commercial software for the digital twin efforts.

IES believes "that every building of every city in the world can be decarbonised. Our purpose is developing the technology to make that happen," according to the company's mission statement. IES has 504 employees listed on LinkedIn as of February 2024, though we don't know actual headcount figures for the company.

This is Apax Partners' first climate-focused investment via the Apax Global Impact Fund. The deal is subject to "customary antitrust approvals," Apax said.

Apax Partners Acquires IES: Executive Perspectives

In a prepared statement about the deal, IES Founder and CEO Don McLean said: "I’m incredibly proud of the IES team for the success we have achieved over the last thirty years, and in Apax we have found a likeminded partner who is ideally placed to help us in the next stage of our growth journey. Buildings and cities have the potential to make the biggest impact in reducing carbon emissions globally. This investment, and the support of the Apax Impact team, will empower us to support ever more clients around the world in creating a built environment that is resource and energy efficient.”

Added Edward Donkor, partner at Apax Global Impact: “We couldn’t be happier to be partnering with Don and the entire IES team in their mission to decarbonise the built environment. This partnership marks the first climate-focused investment for the Apax Global Impact Fund, and we see huge potential for IES’s pioneering software.”

Concluded Chris Robinson, principal, Apax Global Impact: “As we collectively progress towards Net Zero goals, innovative technology such as that offered by IES will prove critical in the transition to a more sustainable future. We look forward to working closely with the IES team on our joint vision for the company, harnessing IES’s market-leading software to solve some of society’s biggest climate challenges.”

M&A Trends: Smart Buildings, Decarbonization and More

The M&A deal surfaces at a key time. 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 the New York Local Law 97; a large buildings emissions law in Seattle, Washington; and a Future Homes Standard in the United Kingdom.

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.