Edison Issues ADR Research Update on Intelligent Energy Holdings

Nov 17, 2015, 03:32 ET from Edison Investment Research

LONDON, November 17, 2015 /PRNewswire/ --

Intelligent Energy (IEH) has signed an agreement to acquire GTL's energy management business, which provides energy to over 27,400 telecom towers in India, for £85m ($129m). The transaction is expected to generate long-term recurring revenues worth £1.2bn ($1.8bn) over 10 years. Management expects EBITDA margin for this activity to rise from c 15% to 30-35% (c £40m or £61m per year), within three to five years. We revise our estimates and indicative valuation to reflect the transaction, giving a base case fair value of £471m ($717m).

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Our sum-of-the-parts analysis gives a risk-adjusted base case indicative valuation of £471m ($717m). The potential value arising if DP&G achieves management's target of 135k towers by end FY17e is explored in the body of the note. This analysis excludes any value associated with long-term royalties for the Motive division or licence fees and royalties for the Consumer Electronics divisions.

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