PowerOne has finalized the purchase of a 100 percent interest in ResCom Energy, the Chicago-based competitive energy marketer announced on August 18.
The disclosure follows acceptance by the Federal Energy Regulatory Commission (FERC) on August 6 of PowerOne's request for approval of the ResCom purchase.
ResCom already is an established retail energy provider, licensed to operate in 11 utility territories across six states in the Midwest and Northeast. The company now will operate as a wholly owned subsidiary of PowerOne.
"The purchase of ResCom Energy marks the most significant milestone for to date," stated PowerOne President and CEO George Wahbeh, further noting that "With this acquisition, PowerOne completes its transition from broker to retail energy provider.
“Our aim will now shift toward the sale of electricity, natural gas and related products and services directly to residential and business consumers through ResCom,” Wahbeh added. “We believe ResCom's current service territories represent the strongest opportunities for growth of customer base and revenue available nationally. We estimate revenue from energy sales to be 12 to 20 times higher per-customer than commissions earned through brokering services."
"PowerOne is expediting its business plan through strategic acquisitions," said company CFO Dennis Locke. "This is the third, and most important, acquisition for the company to date. We are currently shopping for a preferred supplier agreement or similar capital partnership, which we will use to rapidly increase our customer base and to fund energy purchases."
ResCom has historically been a very lucrative operation, with generous revenue and strong internal rate of return, PowerOne reports –noting specifically that the previous owner's strategy was to build high-value books of business and sell to larger suppliers. Audited financial statements for last year show ResCom revenue at $2.4 million, with $924,000 passing through to net income. Performance for prior years was similar.
Proforma revenue for ResCom shows electric sales growing from $14.7 million in the first year of operating as a PowerOne subsidiary to over $119 million in the third year.
PowerOne management said the company initially will pursue aggressive growth in several key ResCom territories that show the greatest opportunity according to a proprietary index of key factors.
In the long-term, through strategic acquisitions of companies, books of business and through organic growth, PowerOne said it intends to become “a prime acquisition target” for one of the many major retailers seeking to consolidate the industry by purchasing smaller, more agile and aggressive companies.
