The Currency – June 18th, 2024

The boardroom of Melior Equity Partners tells its own story. In fact, it tells around a dozen stories. The walls are dotted with framed press cuttings relating to the company’s portfolio of Irish investments, a list that has increased steadily in recent years. The large Georgian windows of its office on Mount Street Upper look out on the back of the ESB’s rebuilt headquarters. The Miesen Plaza is also visible in the distance. A recent addition to Melior’s investment wall is NRG Panel, one of Ireland’s largest installers of solar PV, battery and EV chargers and heat pump systems.

The Monaghan-based company is growing rapidly. Earlier this year, it merged with JFW Renewables, creating a combined business with 125 staff. But, as I discovered over an hour in the Melior boardroom, this is just the start – the company harbours significant ambitions to scale through organic growth and acquisitions. And that ambition is evidenced by the people sitting across the boardroom table. Fergal Leamy is the chief executive of Glen Dimplex, one of Ireland’s largest privately owned companies and a former CEO of the state forestry agency Coillte. A senior adviser to Melior, Leamy has agreed to become the non-executive chair of NRG Panel. Beside him is Jonathan Dalton, a managing director with Melior who previously led the corporate finance team at Key Capital.

Over a lengthy interview, they outline their vision, explaining how and why NRG Panel can scale into a business that can employ hundreds of people and generate hundreds of millions of euro in sales. It was the scale of this ambition, and the mission behind it, that brought a corporate heavyweight like Leamy to the table. Fergal Leamy got to know Jonny Cosgrave and Peter Garvey, the founders of Melior Equity Partners, after he moved back to Ireland in 2015 to become chief executive of semi-state forestry body Coillte. Leamy had spent four years working with Terra Firma Capital Partners, one of Europe’s most active private equity firms. In addition to being a director at Terra Firma, he was also chief executive of one of its portfolio investments, the Consolidated Pastoral Company, an Australian-based agrifood business with an enterprise value of €525 million (the firm operates cattle stations across millions of hectares in Australia stocking more than 300,000 cattle). Between the two roles, he had both private equity and operational experience. But he had also scaled and exited businesses as chairman. He was non-executive chair of British-based healthy baby food company Little Dish for four years. Co-founded by Roscommon-born food entrepreneur John Stapleton, Little Dish was sold in 2017 for £17 million to US investment firm Profile Capital.

When he came back to Ireland, Leamy wanted to invest in Irish companies as well as pursue an executive career. He felt that Cosgrave and Garvey’s approach was distinctive, akin to the best private equity in London or New York. “How they go about analysing opportunities, their perspective on building teams is different to others in Ireland,” he said. The trio had a lot in common, and, as Ireland emerged from the financial crisis into recovery, developed a personal rapport. So, when Cosgrave and Garvey were co-founding Melior Capital and raising a €160 million fund in 2020, they asked Leamy, by then a year into his new role with Glen Dimplex, to join a group of its experienced senior advisors. “The idea was to come on as a senior advisor, and to invest a bit and to work with the teams in portfolio companies,” Leamy said. “All the senior advisors have different industry backgrounds, so the idea is to be able to access the best views on different sectors.” Leamy found himself drawn to advising Melior on its investments in the green economy. “I always had a passion for energy transition,” he said. “There is a significant investment required in transition, and as an investment house, this was a really strong place to do some good and potentially generate some decent returns.” Leamy also felt it important for Melior to be a leader in investing in the sector. “Every country is going to need to transition, and a lot of international firms will be focused on their own countries. I felt an Irish-based investor structure is going to drive the transition in this country,” he said. “I’m also always a big fan of trying to invest in areas where you’ve got some strong winds behind you and make sure that it’s not purely dependent on how good you are or how lucky you are.”

In November 2023, Melior acquired a majority stake in Monaghan-based NRG Panel (NRG), an installer of solar panels and heat pumps. The deal was led by Melior managing director Jonathan Dalton and closed after a rigorous process. The idea to invest in the sector arose from one of Melior’s quarterly meetings with its senior advisors to discuss its next investments. Leamy and another senior advisor, the co-founder of consulting firm SustainabilityWorks Laura Heuston, both agreed that Melior needed to invest in the solar and renewable energy installation sector. The market was fragmented and full of small players. Melior could see an opportunity to consolidate it through acquisitions and the development of a national brand. An important first step was finding the right company to invest in to build the platform, and the consolidation strategy, around. “We met something like 35 different companies,” Dalton said. “We could see it was an interesting place to go. We’re always trying to figure out where to spend our time, more than our money. There was no obvious platform.” Melior also wasn’t sure where it wanted to invest in energy transition so it looked at specialist areas like the operations and maintenance of wind farms as well as at different markets ranging from commercial to consumer. “Jonathan Dalton did a huge amount of legwork on the opportunity,” Leamy said. “It became obvious that this wasn’t the standard: buy a company, back a management team and then exit. There was no company that was off-the-shelf ready to be invested in at that point.” Melior felt it needed to build a platform to create a business capable of becoming a major force in renewables. Investment giant Carlyle, a long-term partner of Melior, helped introduce the Irish firm to companies it had invested in across different markets. Meanwhile, Leamy used his international network, reaching out to interesting renewable firms in Germany and Britain.

As Melior refined its investment thesis, Dalton was reintroduced to Conor Foley, an experienced corporate leader with the ability to take on a new venture. Foley had previously founded a heating and solar business which he sold to the KN Group, a telecoms infrastructure company, which merged in 2018 with Circet to become a combined group with sales of more than €1 billion. Foley led its UK business, but he wanted to come back to Ireland and was looking for new opportunities. Melior knew it had found its leader. Leamy was also becoming more interested and felt his experience could help if he came in as non-executive chairman. “I was intrigued by the challenge of pulling together the platform, and helping support Jonathan and the team as best I can to drive it,” Leamy said. “The idea of bringing in an external CEO and pulling together founders is a complex jigsaw to be put together. First and foremost what interested me was the opportunity, but secondly, it was the challenge around what we’re trying to do here.” At the same time as it was convincing Foley to come on board, Melior continued to look for the right entry point. “We looked at heat pump businesses, solar businesses, residential and commercial. NRG was one of the first firms we met,” Dalton said. “Ultimately we concluded it was the right fit, and Conor had an existing relationship with Ollie Hughes, one of its shareholders, which also helped.”

Founded in 2015 by Conal O’Reilly and Hughes, NRG installed solar PV, EV chargers and heat pump systems primarily in residential sites. But it also had a commercial business, and Melior liked the diversity of its services and experience. The firm employed more than 60 people so it was significant in an Irish context but small in terms of the potential market it was targeting. “We knew from the beginning that we weren’t going to be able to buy something that was ready-made in our typical size,” Dalton said. “We always had M&A in our thesis. But we really like NRG. They are high-integrity guys and ambitious. They want to take their business to the next level and they really welcome the idea of having Conor come on board to help them.” Another factor that impressed Melior was that NRG is the official installation partner for Solar PV with Electric Ireland. “In terms of professionalisation and controls and processes, they have everything in place in maybe a way that some others in the market don’t have,” Dalton said. “So there were lots of things we liked about them.”

In April of this year, NRG merged with Galway-based JFW Renewables, an installer of solar PV, battery and EV charging services around Ireland. The price paid was not disclosed, but it added 50 staff, bringing the total in the business to 125 people. Dalton said NRG is working on a rebrand of the combined businesses to bring them together under an umbrella brand that will reflect the diverse number of things it does in the renewable and energy efficiency space. How big do they want to become as a business? “We’re in virgin territory,” Leamy replied, adding that the merged NRG and JFW intend to offer the “whole package” to commercial and residential users – from solar to heat pumps to battery storage and grid services – in the most efficient way possible. This, Leamy said, was a huge and emerging market: “There is a big sustainability angle to this but there are also other elements. First, as a country, it is about energy security, and secondly, it is about individual control.” He added: “The final piece is that we’re trying to allow businesses to hit their sustainability goals. Most businesses are going to have to drive to net zero and we can help them do that.” Leamy said there was huge potential just building on what they already have by engaging with existing customers and winning new ones. “From time to time we will supplement that with acquisitions to build our platform out further, but the organic growth is in the business naturally,” he said. “So, it will be a mixture of both organic and acquisitions.” The scale of the opportunity means NRG expects to become a much bigger employer. “During our ownership, I would say 500 people is a reasonable number, 1,000 people possibly,” Dalton said, pointing out that the management team was aged between 35 and 47 and hungry to scale. “They may wish in time to find another financial investor and go on and do another stint with them, and grow even more,” he said. “The commercial opportunity is only just starting, as there’s a very large market to go after.”

Finding skilled staff, Dalton said, was a barrier to entry for competitors but it was also a challenge for incumbents. “One of the challenges to grow in this market is securing, training and developing a team that at the moment is reasonably difficult because of scarcity.” NRG has hired a HR director with a construction background who previously trained 200 apprentices for her previous employer, and Leamy said the firm planned to invest heavily in training people. “Probably the biggest blockage in this and every other country is the skills gap,” Leamy said. While a huge number of people had been trained to service and install gas boilers, they needed to be retrained to install green equipment as companies and homes transitioned away from them. “We need to build those skills,” Leamy said. “In Germany and France, there are a lot of programmes that are government supported and government led to drive the apprenticeship model and in Ireland we’re going to be no different.” Melior, he said, wants to work with government agencies to close the skills gap and train people on how to deliver the energy transition. “This is absolutely crucial,” Leamy said. “It is not going to be the academics who make this transition happen, it’s going to be people on the ground who do it.” Dalton said the firm planned to build a training academy near Monaghan to ensure it had access to the skills it required. Currently it works on 2,500 installations a year, but it knows that to grow faster will require expanding its team substantially.

In his role with Glen Dimplex, Leamy is regularly on the road, travelling to its international outposts. I ask how Ireland compares with other countries regarding what NRG hopes to do. “I personally think that we’re in a very immature market in most countries,” Leamy said. “So, you’re unlikely to see a big international player doing this across multiple jurisdictions. What we are seeing is multiple players coming up in each country and then probably five to ten years down the line you’ll probably see a big international player when the market matures a bit more.

“Where we will stand apart is as a large platform with a strong brand and with strong customer service. We’re going to make sure we’ve got the optimum solution that’s going to stand the test of time over ten, 15, 20 years. “That’s where we’ll differentiate ourselves over the longer term. The difference between a properly designed installation in a home and a poorly designed one can be quite dramatic, in terms of its economics and sustainability.”

For both homes and businesses, upgrading their energy systems to green will cost money. Dalton said initial discussions had already been held on finance solutions, adding that Melior is backed by AIB and Bank of Ireland. “They’re both investors in our fund, so they’re an obvious place to have these discussions,” he said. The government, he noted, had put €500 million behind a new low-cost loan scheme for homeowners delivered by the Strategic Banking Corporation of Ireland with the support of the Sustainable Energy Authority of Ireland and the European Investment Bank. “That’s only just come in,” Dalton said. “We see it as a real enabler. If we can reduce the friction from a homeowner point of view of making a big capital investment, then the payback is very compelling if the savings outweigh the cost of finance and repayments.” Leamy said the business case for investing in greener energy was becoming the law with Corporate Sustainability Reporting Directive (CSRD) rules. “People have to decarbonise and drive towards greener solutions. There will be financing options but how we do it exactly is yet to be refined,” he said.

The turnover of NRG after its merger with JFW is already in the tens of millions of euro. Where could it get to in time? “This could easily be €100 million plus. It could be a €200 million to €300 million sales business. If you think about scale in terms of, say seven years’ time, the big guys will want to see €500 million to €1 billion,” Dalton said. “When you get to that they’ll think that’s going to move the dial for us and make it worth coming to Ireland.” Dalton said Melior hoped to scale the business with its management team to become big enough for an institutional investor to be interested. “At that stage, it will be very compelling for a utility, an international consolidator, a big infrastructure fund or financial investor to invest in,” he said. Will it need to strengthen its team to grow that big? “I think in terms of the team we’re well ahead by having a real fit-for-purpose management team. We have the senior people to drive this business and make it institutional grade,” he said. Leamy said that NRG can stand out from other operators because of its professionalism, and ability to stay in front with the best technology. “The standard of installing technology, the service and experience needs to be top class. I think that’s going to be the thing that first and foremost differentiates us,” he said. “Technology is going to be a key differentiator. We’re in the foothills of technology on solar and other systems in the home. It’s going to develop quite dramatically over the next period of time and what will be crucially important is to choose a company that has the ability to stay ahead,” Leamy said.

Dalton said that NRG saw it building relationships with its customers over decades, as it installed, serviced and enhanced services over time. It wants to be a “one-stop-shop” for its customers both in residential and commercial. Geographically, NRG has a strong presence on the border, West of Ireland and in Leinster, but it doesn’t have a base in Munster. “I would say the optimal place from an acquisition perspective would be in Munster because it’s that part of the country that is hardest to get to from our other two locations,” Leamy said.

Leamy believes that the impact of upgrading large numbers of homes would cumulatively make a big difference in Ireland. “One of the big conversations on energy policy is about the amount of renewables coming into the system, data centres and other choices,” he said. “If you’ve got two million plus homes out there that can be used to help balance the grid and you’ve got all the business premises that can be used to help, that can offset some of those problems. “This has to be part of our nationwide energy policy. We should as a country think about what levers we can pull now for what the world is going to be like in 20 years’ time.”

Ireland is forecast to miss its 2030 carbon emissions targets, but Leamy remains positive. “There has been huge progress made. But as a country we need to step back and say, ‘let’s solve the blockages’. Where are the blockages? They’re in finance and skills,” he said. “Homeowners and businesses need a bit of advice and a simple path. Most residential homeowners, including myself, and business owners have an aspiration to do the right thing in terms of sustainability. They want cheaper energy but a lot of the time they don’t know how and there’s a lot of confusion about new technologies.” “A lot of what we will be doing is working with homeowners and businesses to help them understand what they can do and then converting as many homes and businesses as we can to better ways of doing things. The evolution of the technology is constantly improving and the cost of the technology is constantly decreasing,” Dalton said. “For customers, it’s a compelling proposition and it’s becoming more compelling all the time.”

RTE – April 17th, 2024

Monaghan based renewable energy services firm, NRG Panel, has bought Galway based JFW Renewables. Financial terms of the deal have not been disclosed. Headquartered in Loughrea, JFW installs solar PV, battery and EV charging services around Ireland. JFW Renewables employs around 50 people, bringing the total numbers employed by NRG Panel to around 125.

Irish private equity firm, Melior Equity Partners, which partnered with NRG Panel in October of last year, is supporting the deal. “JFW is an innovative business with an amazing reputation for customer service,” said NRG CEO, Conor Foley. “We have a plan to combine the management talent and best practices of both businesses to deliver on our vision to create a cleaner, more sustainable island.” “This is a significant step forward in our objective of building the market leading, diversified renewable energy partner for homeowners, businesses, communities and utilities on the island of Ireland. Melior was instrumental in both finding and executing this acquisition.”

Based in Castleblayney, Co Monaghan, but servicing residential and business customers across the country, NRG was founded in 2015 by Conal O’Reilly and Ollie Hughes. NRG will continue to be led by CEO Conor Foley, assisted by a leadership team made up of individuals from both businesses.

Gearoid Whelan will hold a significant equity stake in the group and will join the leadership team as Chief Revenue Officer and also become a director on the group’s board. “I am excited by the opportunity to create a national renewable energy champion alongside NRG,” he said. “The scale of the combined group, with the support and capital backing of Melior, will allow us to invest ambitiously in our people and add a range of exciting new services for our customers.”

The company has plans to further grow its footprint in the Republic of Ireland and Northern Ireland. “We are very pleased to conclude this strategic acquisition so soon after our initial investment in NRG,” said Jonathan Dalton, managing director of Melior Equity Partners. “We have a number of other near-term M&A opportunities in our pipeline and look forward to other likeminded founders joining the group”.

Business Post – January 28th, 2024

The Irish economy is set to rebound strongly in 2024 as business optimism for the year ahead has surged to buoyant levels, the head of a leading private equity firm has said.

Jonathan Dalton, Managing Director of Melior Equity Partners, the Dublin-based private equity firm, said companies no longer view inflation as their primary concern and are preparing for a year of growth.

A recent survey carried out by the Melior showed more than 85 per cent of Irish SMEs said they are either quite optimistic or very optimistic when asked about their outlook for 2024.

“I was blown away to see that level of confidence given all the uncertainty businesses are currently faced with,” Dalton told the Business Post.

Almost 40 per cent of respondents cited a reduction in consumer demand as the biggest challenge for 2024, followed by recruiting staff and supply chain risks. Just 12 per cent of companies cited higher interest rates as the biggest challenge, while 10 per cent said inflation.

Only 16 per cent of Irish SME’s said they plan to expand into new markets or geographies in 2024, which is a sharp reduction from last year’s survey by Melior.

Just 8 per cent of SMEs believe growth will be fuelled by acquisitions this year, suggesting a reluctance to pursue M&A given the increased cost of capital due to higher interest rates.

“Companies are saying they are less internationally focused on sourcing growth. They’re saying they will stick to the knitting and try to sell more to their existing customers,” Dalton said.

“Businesses are weighting their investment plans towards de-risked options. So, companies are not ignorant of the external risks. What I think is extraordinary from the survey findings is that businesses are ranking inflation at the bottom of the ladder in terms of the biggest challenges they expect in 2024. It’s the least prominent issue, which shows that the interest rate hiking cycle by central banks is working,” Dalton added.