Eco Innovator November 2011

Equity Capital

Energy Action IPO Oversubscribed

Energy efficiency company Energy Action listed on the ASX on 13 October after its $3.8 million IPO was oversubscribed. The $1 shares listed at a premium of around $1.30 and are currently trading at around $1.22.

Martin Rushe, the managing director of Moss Capital, which acted as corporate advisor to Energy Action, said the fact that the IPO didn't just get away but was oversubscribed in this market shows that investors see energy prices are rising and that energy efficiency can deliver profits.

"The main reason for Energy Action's listing is to fund future expansion plans. We see great opportunities developing in this space," he said.

Energy Action's managing director, Valerie Duncan, said "We are very pleased with this result and excited about the company's future in an environment of growing energy costs and future carbon pricing. Energy Action is strategically positioned to help Australian businesses get the best price for energy, minimize energy expenditure and understand carbon pricing and its effects."

Energy Action is an energy auction and energy management and efficiency business. It established the Australian Energy Exchange, which it says is Australia's only online reverse energy auction platform, and holds online auctions where electricity retailers bid to fulfil client requirements.

Chairman, Ronald Watts, said the auctions are designed to get a business the best possible deal amongst all retail offers. "From the viewpoint of economic efficiency, it's pretty good, since it delivers a fairly frictionless price for a uniform product. Another way of expressing this is to say that the cost of sales is low. Since all retailers are treated equally, it also delivers the lowest price."

However, Energy Action makes around 60 per cent of its revenue from energy management and efficiency services. It does this through its Activ8 energy management and contracting service and through its Activ8+ energy efficiency and sustainability partnering service.

Activ8 includes emissions as well as daily energy monitoring, efficiency reviews, alerts, detailed monthly reporting, and industry benchmarking.

Activ8+ is a fee based advisory service covering metering intelligence, sub-metering of individual parts of plant and equipment, carbon footprint measurement and advice, energy audits, feasibility studies for co-gen and tri-gen projects, and coordinating finance for large energy and efficiency projects.

Energy Action has been operating for 11 years and has low debt. Revenue is growing at 30 per cent per annum. It has been profitable since 2005-06 and pays a fully franked dividend.

The company is looking to grow through acquisitions and moving into auctioning gas as well as organically.

Energy Action has 25.1 million shares on issue and cash of $4.3 million.






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