Private equity has hit the share market for fourth time this quarter with the purchase of Mercury's smart metering business, Metrix, by Australia's intelliHUB Group, for $270 million.
IntelliHUB, a joint venture between global smart metering leader Switzerland's Landis+Gyr and Australasian private equity giant, Pacific Equity Partners (PEP), said Metrix's 460,000-meter base made it a natural acquisition.
Metrix, which represents about 5 per cent of the Auckland-based power generator and retailer's assets, is one of the country's leading smart metering solution providers, managing over 460,000 meters with household and commercial connection points.
The deal is one of a handful of private equity deals under way.
Last month, Trade Me received a $2.6 billion buyout offer from a UK private equity company Apax Partners.
In October, Restaurant Brands received a takeover notice from Mexican private equity firm Finaccess to acquire up to 75 per cent of the company at $9.45 cash per share, or $881m.
Further down the scale, Texas-based private equity firm ESW Holdings made an offer for e-commerce company SLI Systems at 65 cents a share, valuing the company at $40m.
Daniel Kieser, managing director at Shareclarity, said the run of private equity deals was due to combination of actors.
"One; it's nearing the end of year, which is a psychological timeline for deals to get done; two the private equity firms have a lot of money that they're motivated to allocate, even if it's at higher prices than days gone by; and three different buyers could see opportunities other don't or can't price," he said.
Commenting on the Metrix deal, Kieser said electricity meters offered a unique piece of "real estate" that people tolerate on the sides of their homes.
"They are on every home and hold a number of spare 'slots' that can be used to provide other services like water metering, security and managing in-home devices," he said.
"They also aggregate a lot of data that could hold value for other companies," he said.
Landis+Gyr and Pacific Equity two paired up early this year to buy Australian metering firm Acumen from Australia's largest energy retailer, Origin Energy.
IntelliHUB is also rolling out Trustpower's smart metering business.
As part of the deal, Mercury and intelliHUB will enter into a long-term meter services agreement. Sale proceeds will initially be used to pay down debt, Mercury said.
Further application of the proceeds will be considered with the company's full-year results.
Mercury chief executive Fraser Whineray said Metrix has been a strong performer, operating and branded separately from Mercury's core generation and retail activities.
"These features made it attractive to a focused owner looking to advance the role of smart metering technologies in New Zealand and Australia even further," Whineray said.
Whineray said on a conference call that Mercury had itself been interested in acquiring Australian metering assets, and today's deal was the result of the connections made during that process.
Strategically, the sale would not have come as a great surprise.
"We are the last generator/retailer to divest a metering business in Australasia - many others have undertaken this step," he said on a conference call.
Mercury's retail business has metering service agreements with all significant metering service providers.
Under the sale agreement Mercury's retail business will continue to be a key partner of Metrix, he said.
The sale will reduce Mercury's $500 million-plus full-year group operating earnings by about $28 million, the company said.
More than 80 per cent of New Zealand homes and business already have smart meters.
Mercury shares last traded at $3.53, having gained 2 per cent over the last 12 months.