EQT mandates Houlihan Lokey for StormGeo exit – sources

11 September 2020 - 05:29 am UTC

by Hanna Gezelius, Amy-Jo Crowley, Auri Aittokallio, Carl-Johan Kullving and Emma-Victoria Farr

Nordic sponsor EQT Partners [STO:EQT] has mandated Houlihan Lokey to exit StormGeo, two sources familiar with the situation said.

 

The auction for the Norwegian weather forecasting service firm is set to commence towards the end of 2020, one of these sources and a third source familiar said.

 

StormGeo generates between EUR 15m-EUR 20m EBITDA, one of the sources said, while a banker tracking the situation said this is closer to EUR 15m. 

 

In 2018, the company reported EUR 12m EBITDA, a sector banker said. StormGeo reports an EBIT of EUR 13m, a fourth source familiar said. The asset could fetch a valuation 14x-18x EBIT, the banker suggested.

 

Nordic-based bankers have been speculating about an exit for some time and the pending sale is likely to generate healthy interest from suitors, several other bankers said.

 

The company struggled with client concentration some three-four years ago, one of the sources familiar said. The company had a big contract with the British Met Office, but it has since expanded its customer base, he said.

 

EQT had already considered exiting StormGeo some years ago and held discussions with potential suitors, a second banker tracking the situation and a private equity source said.

 

At that time, logical suitors included offshore service companies whose customers could benefit from StormGeo’s services and private equity firms, the banker said. In terms of private equity interest, tech-focused and London-based bidders were considered more strategic as opposed to Nordic firms, he added.

 

A trade buyer may be more logical this time as there is no obvious growth path for a sponsor, the banker said. The Asian market is less mature than the Northern European market which could present a growth avenue for the next owner, he said.

 

However, given its size, StormGeo is likely to end up in the hands of a sponsor, the banker argued. 

 

Some of the previous strategic players deemed logical takers could perhaps show interest again, he added.

 

These players include Texas, US-based aviation product and service company Universal Weather and Aviation, Pennsylvania-based media company AccuWeather and IBM [LON:IBM] – which acquired the Weather Company in 2015. Minnesota-based weather and market information provider DTN, Colorado-based weather information provider Global Weather Corporation, oilfield service provider Schlumberger [NYSE:SLB], UK consultancy firm BMT, and geo-intelligence and asset integrity solutions Fugro [AMS:FUR] are also among logical takers, the same banker said. 

 

Similar companies in the sector include TGB-owned Meteo Group and the Weather Channel, the sector banker said. StormGeo is mainly a weather information provider but it also other services such as software for the maritime sector, one of the bankers tracking said.

 

The company has made several acquisitions including of Dubai-based weather forecasting company Met Consultancy to expand its Middle Eastern operations in 2011, Houston-based ImpactWeather in 2012, California-based Applied Weather Technology in 2014. Last year, StormGeo and DNV GL merged DNV GL's ECO Insight and Navigator Insight products with StormGeo's solutions and acquired 51% of Brazilian Grupo Climatempo

 

The company was founded in 1997 as a spin-off of Norway’s largest commercial broadcaster, TV2. Today, it has 24 offices and six global weather-operations centres, according to its website. The company provides weather intelligence and decision support services to the shipping, oil & gas, renewables, aviation, and other industries.

 

EQT and Houlihan Lokey declined to comment. StormGeo did not return a request for comment.