Otovo signs EUR 105 million agreement to sell continental subscription assets to Swiss Life Asset Managers

21 Feb 2025 08:48 CET

Otovo ASA (“Otovo” or “the Company”) today signed a definitive agreement to sell
its continental(1) portfolio of subscription assets to FORTE PV S.à r.l. part of
a collective investment scheme managed by Swiss Life Asset Managers (“SLAM”).

* EUR 105 million (NOK 1,209m) split on assets built in 2020-2024 of EUR ~50
million (NOK 580m) closing in Q1; and continuous sale agreement of EUR ~55
million (NOK 638m) covering assets to be built in Q1 2025 - Q3 2026.
* Cash release from first close in Q1 of EUR ~13 million (NOK 155m).
* Expected gross margin on sales under continuous sales agreement of 32%, with
instant revenue recognition under IFRS.
* To align interests Otovo will retain 11.69% ownership in the portfolio and
SLAM will receive 55.9 million warrants in Otovo.

The transaction relates to the sale of shares in eight special purpose vehicles
holding a fleet of around 6,000 residential solar and battery subscription
assets in eight countries. It is the first cross-European residential
distributed energy transaction, and includes all subscription systems built by
Otovo in 2020-2024, and systems that will be built from 2025 until the end of Q3
2026. The total transaction size is expected to total EUR ~105 million (NOK
1,220m) once all systems are completed.

– We believe this and last year’s transactions form the basis for a long-lasting
partnership that we hope will help tens of thousands of homes to get cheaper and
cleaner electricity. Otovo is a uniquely positioned platform to create
attractive energy assets that fit perfectly with our investment strategies, says
Marc Schürch, Head of Renewable Energy of SwissLife Asset Managers.

– For Otovo this is a seminal event that frees up cash and refines our business
model. It feels like making landfall after a long journey, says Andreas
Thorsheim, CEO of Otovo.

In October 2023 SLAM and Otovo entered a similar agreement relating to the
portfolios in Norway and Sweden. This partnership now generates and operates
solar and/or battery systems across ten countries in Europe.

BUSINESS MODEL IMPACT
Otovo has during 2024 gone through a total reset of the Company’s business
model. This includes:
* Rightsizing the Company’s cost base to be profitable around recent activity
level
* Implementing a new hybrid sales model with higher customer centricity that is
expected to lead to better conversion rates
* Selling the Company’s continental subscription assets to free up cash and
enter into a continuous sale agreement on terms that improve cash flow

The result is an Otovo that is a leading pure-play creator of solar, battery and
other home electrification assets. It’s a lean and simple business proposition,
and Otovo is the only company that can offer this across Europe.

– Otovo has strengthened its liquidity, improved its cash flow structure and
found a strong partner for the future. We are in a good place to address the
massive electrification of homes that is ongoing across Europe, says Thorsheim.

Following the transaction Otovo will have two primary customer segments
* Direct sales (B2C): Sales directly to consumers across all markets. This
represented 70% of installs in Q3 2024 and has a blended gross margin of ~24%
* Leasing (B2B2C): This represented 30% of installations in Q3 2024 and will
have blended gross margin of ~32%

All new sales in both segments will now convert to cash upon completion of
installation.

TRANSACTION STRUCTURE
The transaction is structured as a sale of 88.31% of the shares in EDEA Europe
AS (“EDEA”), a Norwegian entity that owns the subscription special purpose
vehicles in Austria, Belgium, France, Germany, Netherlands, Spain, Poland and
Portugal. The retained equity in the first close amounts to EUR ~6 million (NOK
67 million).

After the transaction, Otovo will pay down EUR ~31 million (NOK 358m) of debt.


As part of the transaction Otovo will enter into a new service agreement with
EDEA. Under this agreement Otovo will continue to sell systems to EDEA until Q3
2026. Otovo will also provide management, operations and maintenance services to
EDEA and expects revenues from this of around NOK 10 million per year.

To align interests and ensure SLAM has exposure to the inherent upside in
Otovo’s share price Otovo has issued 55.9 million warrants to SLAM with a strike
price of NOK 1.15 per share. The warrants have a three year duration. If and
when exercised the warrants will offer approximately NOK 64 million in proceeds
for Otovo.

Otovo has also entered into a shareholder agreement for the ownership of EDEA.
Under this agreement Otovo will fund 5% of new systems sold from Otovo to EDEA.
The parties have also agreed to a put/call mechanism that will ultimately lead
to the sale of the remaining shares.

LIQUIDITY AND FINANCIAL REPORTING
Following the transaction EDEA will be deconsolidated from Otovo’s financial
statements.

Otovo expects to realize a one-time cash release of NOK ~155 million. In
addition, the company will through the forward flow period sell subscription
assets to EDEA (SLAM).

Otovo’s ownership in EDEA will be reported as an associated company.

Otovo will also stop reporting on Alternative Performance Metrics with effect
from Q1 2025.

TIMELINE
The transaction is expected to close in Q1 2025, and is subject to customary
closing conditions such as financing.

SpareBank 1 Markets and DNB Markets are acting as financial advisors, and
Thommessen is acting as legal advisor to Otovo in connection with the
transaction.

1) Assets in Austria, Belgium, France, Germany, Netherlands, Spain, Poland and
Portugal. Excludes Otovo’s subscription contract volumes in Switzerland and the
United Kingdom; and Scandinavia (sold in a separate agreement in Q4 2023 to the
same buyer).

***

For further queries, please contact:

Andreas Thorsheim, Chief Executive Officer
Phone: +47 93 06 51 78

Petter Ulset, Chief Financial Officer
Phone: +47 47 93 60 26 43

This information is considered to be inside information pursuant to the EU
Market Abuse Regulation and is subject to the disclosure requirements pursuant
to the STA section 5-12.

***

About Otovo: For homeowners, Otovo is the easiest way to get solar panels on the
roof, and batteries in the home. Otovo is a marketplace that organizes hundreds
of local, high quality and qualified energy installers. The company uses its
proprietary technology to analyze the potential of any home and finds the best
price and installer for customers based on an automatic bidding process between
available installers.

Follow us on investor.otovo.com for reports, financial calendar, contact details
and more.

More information:
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