Investor Wag Informal Investment Insights

Ecosave Holdings (ASX:ECV) IPO

According to the Australian Bureau of Statistics, energy costs for manufacturing and households have increased by 61% and 72% respectively since 2007, outstripping inflation by nearly 5 fold. This is mainly due to an increase in network costs and to a lesser extent the carbon tax. With the escalating costs of energy, businesses are putting increased emphasis on energy costs. Companies that assist in this area such as Energy Action (ASX:EAX) has benefited with its share price more than tripling since listing a little over a year ago.

Ecosave Holdings (ASX:ECV) is a company that help reduce the energy consumption, and consequently the energy costs, of large corporates and businesses. The process begins with a review of the client's energy consumption, then a proposal is put together and upon execution Ecosave will order the required equipment and arrange installation. The energy savings outlined in the proposal are guaranteed and backed with an Energy Performance Contact (EPC). In many cases these projects have a short payback period making them "no brainers" for cost conscience businesses.

ECV is scheduled to list on the ASX on Tuesday 15th January at 11am. They've successfully raised the maximum target of $5m and will list at $1.00 with a market cap of $25.7m. The listing price will put the shares at 8.5x earnings against the FY13 NPAT guidance excluding listing costs. raised money will go towards working capital. According to the CEO, the company has been unable to keep up with demand in recent years, and the additional cash will help with the expansion of the business through additional hires. You can catch an interview with the CEO by Sky Business News' Switzer below.

[youtube http://youtube.com/w/?v=4ctCLJgbfkc]

While the Ecosave is not as easily scalable, won't have has as high ROE or have as much recurring revenue as a company many will compare it to in Energy Action (ASX:EAX) - it is a company that is well positioned in a rapidly growing sector. You get the feeling that the company is only just beginning to click into gear and this IPO with the raised funds will provide a significant boost into its next phase. It's also well priced with management keeping a majority stake. Looking forward to the listing on Tuesday!

Disclosure: I've been allocated stock in the IPO.