32 - Buying and selling grid-scale batteries with Jonathan Massam (Director @ PwC - Energy Lead Advisory)

[MUSIC PLAYING]

Wow. So 16 years at PwC?

Yeah. Yeah. 16 years. It's quite a long time.

That is a long time.

Enjoyed it the whole time as well, actually. So I joined as a graduate, having done sort of maths with stats at university. And been doing deals in sort of energy and infrastructure ever since, and just sort of enjoyed it throughout.

And now today, we're going to do a conversation that I've wanted to have for a while. Because we're at the--

how to describe it? We're talking about deals today. The word "deal" is always very sexy and exciting.

And today, we are essentially going to talk through how assets are bought and sold, and how advisors like PwC can support on that. And also, how companies are bought and sold--

how everything's bought and sold or how deals work. Jonathan, thank you very much for coming on.

Thank you very much for having me. So it's a great podcast--

listen to it a lot.

Oh, yes.

Really glad to be here.

Do not edit this out, Izzy.

More, please.

Thank you. That's very kind.

All right. So Jonathan, firstly, who are you? You are at PwC. What do you do at PwC, and what does PwC do?

Yeah. OK. Well, so PwC is quite a big place--

about 24,000 people in the UK, but I'll just talk about my bit. So the bit of PwC that I sit in is I lead advisory practice. So we're doing sort of M&A deals, debt and capital raises for businesses.

M&A being--

Mergers and acquisitions. So helping people buy and sell companies, actually.

And the part of PwC that my team that I sit in, we particularly focus on energy infrastructure--

M&A.

So we're doing deals in all the various different things that are going to help us to decarbonize right across the energy transition. So assets and sort of businesses that do things like smart metering, battery storage, EV charging, hydrogen deals, those sorts of things.

OK. And this is--

you work on both sides, right? You work on the side of companies looking to buy other assets, and you work on the side of companies who own assets trying to sell them, or own companies and trying to sell them.

That's correct. So it's a proper sort of full investment banking lead advisory service within PwC. So we help on both the buy side, when there's a company that wants to buy a business or an asset, and we help them think about how can they make that transaction successful. So how can they go about offering the right value for it? How can they go negotiating the deal? What are their strategy and tactics as part of that?

And we also help on the sell side. So there might be sort of a corporate that wants to divest of something. Let's say it's a battery storage portfolio. We would help them think about who they can market it to.

We'd help them think about how to get the best positioning of the asset--

run a competition and get the best price for them.

OK. And this is particularly pertinent now because the battery storage industry--

we're going to talk about batteries as ever.

But we're also going to think about wider assets, but batteries in particular. There's now a big enough market that these things are being bought and sold right, which is quite exciting. And we're seeing them being transferred from, in many cases, higher cost to capital owners to lower cost to capital owners as they become de-risked and all the good stuff that's happening in our industry. Going back to PwC, what's PwC?

What is PwC?

What is PwC?

Well--

I'm being a bit naughty here. I tend to ask these "talk to me like I'm a five-year-old" questions.

So it's the world's largest professional services and financial services advisory firm. So you've got a lot of advisors--

clever people there that sort of want to help get deals done or provide other services. So things like accounting, tax, due diligence, those sorts of things.

OK. And you guys step in as consultants to support on various aspects of the way that businesses are run.

Correct. Yeah.

Cool.

So let's come back to deals. What do we mean when we say a deal? Is that when--

is a deal done when it's signed, or is it when it's paid, or when the--

how do you define a deal? When do you guys get paid?

So--

well, so as part of the services that I provide, we're usually--

we can be sort of flexible in terms of how we structure things. But we usually try and get a deal done and get paid on successful completion of that deal. And successful completion sort of usually means getting our clients to get that deal sort of closed, done. And that's normally when they've signed the agreement--

the sale and purchase agreement, for that transaction--

and when the money starts to flow.

OK. So how would it work? So Modo--

let's say we own 100-megawatt battery.

And we want to--

we own it. It's doing great. It's the best asset on the planet. And we want to sell it to a pension fund.

So then we come to PwC and we say, please help us. What does that process look like?

Well, first of all, you. Made the right choice because you came PwC.

So well done--

a tick for that.

Then there's--

so there's no one size fits all for a transaction. Because every set of business or assets will have its own unique quirks. You might have--

I might have clients that for whom sort of values a highly important item. But also, there might be other bits in there.

So, for example, giving the business to the right sort of partner to take it forward, so that sort of thing. Or sort of finding somebody who's deliverable in a transaction, or getting the right terms and conditions. So we like to structure a transaction and run a process for our clients in a way that's going to meet their objectives. So that's one thing that's sort of worth noting.

The saying, and I just know from venture capital, which is, I'll give you whatever price you want but on my terms. I guess there's so much more to it than price and valuation, right?

Yes, correct.

Sorry I jumped in there.

No, that's fine. But we try to take all of those sorts of things into account and say, I'll talk you through a sort of a typical sales process. But just bear in mind, there's no one size fits all. And it can vary, and it can flex from deal to deal.

So ordinarily, there are normally about three phases for a deal. There'll be a preparation phase.

There'll be usually sort of a round one. And then there'll be a sort of a round two.

So I'm selling your battery storage assets for you. And in that preparation phase at the start, we would come in and have a look at those assets and the economics around them. And we would have a--

think about what are the things that are unique about this? What are the things that are really going to help make these assets stand out versus the rest? So that might be sort of something sort of bespoke or unique about the technology, or their placement within the market, or something like that. We'll have to think through all of that, and we'll work that through with our clients.

Their position on the Modo leaderboard, perhaps?

Exactly. That might be an important factor.

And we'll think about how to best position those assets and how we might sell them. But we'll do that in conjunction with thinking about who we would be selling them to.

And there might be a sort of a broad range of different interested parties. So it could be pension funds. It could be infrastructure funds.

There could be corporates. And each one of those different sort of types of buyers will have their own unique interests and things they're looking for.

So we'll help develop sort of a long list of potentially sort of interested parties. But we'll also be thinking about, how do we best target the sales material to those parties to bring out the things that are of interest to them? So that will be sort of a part, a portion of the preparation.

And then we will also, as part of that preparation phase, will work out what's the timetable going to be? What's the process going to be? How's it all going to be structured? Also, whether our client might want to commission some due diligence from another advisor that can help them have a smoother sales process. Because if you can get some DD done upfront and early, then that reduces the burden midway through the process.

So they might bring in DNV, or someone like an engineering consultancy to do the technical stuff. Or, I don't know, what else do you have? A law firm for legal, that kind of stuff.

Exactly. Or they might bring in sort of a market forecaster to look at what might the revenue forecast be for that asset.

So you pull all of that together and prepare then some sales material, usually a sort of a teaser, and then--

which is a short document to sort of gauge interest from people early on, and then a longer form, sort of information memorandum is what it's called. So--

The IM--

the famous IM. So Yeah. So you guys--

so you send out a teaser, which is a couple of pages before an ND--

before a non-disclosure agreement has been signed, which is to the market, hey, guys, we've got something exciting coming up. Put your name in the hat if you're interested. And then you qualify those and go to the next stage.

Yeah.

OK, cool.

Yeah, exactly.

I'm doing a job for you here.

That's fine.

And then you do the IM, the Information Memorandum. And what information is in there?

So there's usually an overview of the business or the assets--

in this case, the batteries.

What are they? Were do they sit?

But also, sort of financial forecasts. How much money do we think they're going to make? And what does the management team that's sort of selling them, what do they think they're going to make out into the future? So all the necessary information, which is what an investor would want if they were to be able to provide and price up an indicative offer, and that's what we try to pull together.

OK, cool.

Taking a step back a second now. So what does the market look like at the moment in energy storage? So who's interested in these assets, and how is that changing over time? Have you seen a big increase or decrease in interest? And have you seen new players taking part in this market?

So energy transition, or battery storage, specifically?

Well, let's do all of it.

OK. OK. Energy transition as a whole, there is huge amounts of interest and appetite.

So on the need side in the market, I think if you take the UK alone, we need something like 40 pounds billion a year of investment. That's not even talking sort of secondary transactions, businesses getting bought and sold. That's just primary capital going into the UK in order to get anywhere near net zero by 2050. So the demand need is huge.

Let's put that in context. That is more than--

that's about what HS2 was originally priced up as, isn't it? Something like that? Or it's bigger than a Hinkley Point C every year.

It's big.

It's massive.

It's big. So that's the need. That's what the market needs in terms of primary investment. And then on top of that, you then got a huge both financial and sort of corporate market out there that all want to increasingly invest in ESG or energy transition sort of opportunities.

And I think globally, there was something in the order of about 750 billion US dollars worth of energy transition investments last year that shows the scale of the appetite for people to try and invest in these things. And that's only going to continue as trends like ESG just sort of accelerate. And as more and more governments--

I think we're now at sort of 80% of the world signed up to net zero--

get behind and create and stimulate this market and stimulate the need for that investment.

And what's ESG, just for folks listening?

Environmental and Social Governance.

OK. And it's a framework that people want to invest within this framework, so that they can--

I don't know. It's a bit--

you know what? ESG is a bit of a controversial one. Because there's the HSBC dude who stood up and said it's a joke, right? I remember he got sacked.

I remember reading that in the Financial Times.

And I think the top ESG company in the world, seem like--

is it ExxonMobil, something like that? So the ESG thing is--

it's controversial, but it is also a really good thing. It's just perhaps the way that we're putting it into place isn't perfect. We're going down a rabbit hole here. But what do you think about that, Jonathan?

[LAUGHTER]

Well, so at its heart, it is the right thing to do. It is businesses, it is investors moving their capital, moving their investment in a direction that is going to help have a positive impact on the world. But it is complicated. So sometimes you can do something which is good on the E front, but is perhaps more damaging on the S front.

So, let's say, you want to suddenly invest substantially into battery storage, and transition a business away from an oil and gas towards that. Well, that might be really good from an E front. But then what does that mean in terms of the jobs of those in the oil and gas space and the implications on them? And so you might have a detrimental impact on the S front. So you can get quite a lot of complexity around those issues.

So I pulled you into something there, which could be a whole topic in itself. And yet I do agree with you, that ESG thing, it--

just the way--

maybe implementation is the issue and the way we're measuring it. But the point itself, the principle, we should be doing.

So coming back to what you do in your job in mergers and acquisitions. So how much of your time is spent on supporting the sale of, or the purchase of, assets? And how much of it is spent with companies? And then I want to talk, if you don't mind, if you can give some examples of the kind of companies and assets that you've been involved with.

Yeah. Very happy to. So I'd say it's slightly skews a bit more towards assets, but it's not heavily towards asset. At the moment and sort of historically, if you think about the energy transition market, most of the money has been flowing into the build-out of infrastructure--

so onshore wind, solar PV, now more and more battery storage. That is where the majority of the capital is going.

But we're increasingly seeing lots of exciting new businesses pop up around that space who are offering services into that and helping to--

so I'm thinking of businesses sort of EPC contractors, who might sort of connect a battery. Or clever businesses that can do optimisation and revenue trading. Or consultancy or subscriptions businesses that provide information around those markets.

Mm-hmm. OK. And so roughly, 60% issue, say, in assets. And shall we talk about some examples?

Let's get to the juicy stuff--

some examples of some deals you've been involved in and what they've looked like. I know there's lots that you're not allowed to say, but I'm going to have a go pushing you anyway. So yeah--

what sort of deals you've been involved with recently, and why are they interesting?

Yeah, OK. Well, I'll--

there's quite a few that I can talk about. So in the last few years, we've helped on a number of deals right across the value chain. So one example would be a business called Zenobe Energy.

Yeah. We know Zenobe Yeah.

And we got to know them about three or four years ago and have helped them on multiple transactions. So first of all, we helped them to raise about 35 pounds million worth of growth capital from JERA--

[INAUDIBLE]

strategic. Then we went on to sort of help them raise 25 pounds million worth of bank debt from Santander. That was sort of specifically around the battery storage assets. And then more recently, we helped them get 150 pounds million worth of growth capital from Infracapital.

Wow. Big tickets.

Yeah.

And so that's an important thing, actually, that you guys don't just deal with the buying and selling of businesses, but you also help with raising capital. Because none of that involved buying and selling businesses, I don't think. It was raising capital to do more.

No. No, but essentially, yeah, this is primary investment into businesses. And this is those businesses issuing new share capital and receiving money for issuing that new share capital to those incoming investors.

Cool. And what other kind of transactions have you been involved with?

So sticking with energy storage for a second, we also helped Infracapital to invest in a heat storage business--

a Scandinavian business called EnergyNest.

EnergyNest. We know EnergyNest, I think. Yeah.

OK.

So Infracapital put 100 million euros into that business to help sort of build out.

And so, again, that's a primary deal, capital growth, so to help them sort of build out their proposition specifically around creating a service around the [? heat ?]

storage sort of technology that they have.

Cool. And one of those--

let's talk about the Zenobe deal for a second. So they raised stock--

it was equity. And then at the end, it was a big chunk of debt. And how are those transactions--

But it was equity, debt, and then a big chunk of equity again.

Oh, was it? OK. My bad.

That's all right.

And so how is that different? Because I guess sometimes you're dealing with--

well, I'll let you explain. Why is that different--

the process?

The process for--

For raising debt versus equity, for example.

For debt--

well, they have a lot of similarities at a really high level. So you're still trying to sort of create information about that business, but your positioning it to people who have a different product.

That's a debt product that's being issued there. And they have different interests.

So they're more concerned about the downside. What's the risk if this asset or this business doesn't actually make the money that they're saying they're going to make? Whereas, equity investors take a slightly more balanced view--

might be more interested in some of the upsides, and how it's going to outperform?

And what about you guys--

you guys sold Cornwall to Bowmark Capital as well, which was a big deal quite recently.

Correct. Yes we did. So we did that just two or three months ago.

It's Cornwall Insight, by the way.

Cornwall Insight. Correct. Yes.

So it helps the shareholders there to--

this was a secondary deal. So this was helping them exit sort of in majority sale.

Some of the teams stayed with it. But we helped them with the whole process that I just described earlier. So the whole preparation for sale, round one, round two, and then eventually, to Bowmark Investing.

I think what's interesting about that transaction is, one, it sort of emphasizes that point I was making about these businesses that provide services to the transition, and that's attracting interest from investors. Two, it's private equity, as opposed to infrastructure funds.

So you can see that private equity as a class of investor is getting more and more excited about the space.

And they really liked and bought into the fact that the business is supporting the energy transition and saw that as a huge growth market.

And they also liked the fact that a portion of that business is subscription-based, as well as consulting. And both the subscriptions and the consulting are valuable bits of the business and complement each other, essentially.

Yeah. I mean, Cornwall's a great business. They're over--

I don't know how old they are, like maybe a decade or two--

a while, right? I don't know whether Nigel's still involved. But they've built a business that is very well-respected. People love Cornwall in the market.

And we took a close interest in that because Modo is not that dissimilar to Cornwall. I mean, we're probably more technology-driven.

But our team were--

when that news came out, we were interested. I guess the main difference is we--

it would be too early for us to even consider. I mean, I think we're going to go all the way.

We're going to ring the bell on the stock exchange.

But it was very interesting to us to see that deal happen. And the fact that it's private equity, too, shows that--

yeah, there's a lot of interest in this space.

There definitely is.

And so have you got any deals that are live at the moment? What--

so Modo's just raised 100 million quid. What should we buy through PwC?

[LAUGHTER]

What's in the window?

So there's a couple of things that we're working on at the moment. I can't tell you about all of them, but--

You don't have to tell us.

There's--

yeah, I can--

we're currently in the middle of selling a pump storage hydro asset--

so a bit of long duration storage for you.

Yeah. Very topical.

It's development stage. So it's quite early on in its sort of journey. But that's out there at the moment.

And we have just recently been appointed to sell a couple of hundred megawatts worth of operational battery storage. So that'll be hitting the market in the next month or two.

OK. So folks who are listening to this, then get in touch with Jonathan about that.

All right. What else is on my list of things to ask you about? All right. Yeah.

So there's--

you talked a little bit about how a deal works, and you mentioned competitive tension or getting a good price. So how--

I guess there's probably some unwritten rules about how you do that. How does that work? How do you make sure there's enough interested parties?

So say we're selling a 10-megawatt battery. That's probably too small for you guys--

say 100-megawatt battery.

How do we get the right price for it? And what sort of work do you do to find the right buyers?

Well, so in terms of the work we do to find the right buyers, the fact that we're sort of out there constantly buying and selling businesses all the time means that we sort of know the right buyers often just because we've recently interacted with them on another deal. So we know the buyers already, and we have sort of access into all of the investment directors and the decision-makers who can sort of--

who will be interested in this stuff, and we know them pretty well.

It's a tricky--

like, it's a thin line, right? Because your job is to be a trusted partner.

But on the other hand, you kind of need to get everyone excited.

They need to know that there's other interested parties because that is key.

So that is a very thin line to tread, which probably involves quite a lot of emotional intelligence as well. Are there any sort of unwritten rules about how that's handled?

Well, you're right. There isn't a hard rule on it. It's a bit of a balance and a nod.

And people have to trust us when engaging with us. And that's a--

we like to deal with parties in a process fairly and openly and honestly. But it is part of our role to see--

quite often, to see how much interest we can generate in an asset.

And when I was talking earlier about thinking about the buyer's, thinking about how to market to them, part of the early stage conversations we'll be having will be guided towards trying to see if we can generate as much interest as possible. And then naturally, you don't want to take forward too many people through a process and waste too many people's time, including even the management and the--

and our client. So there's an element of filtering as we go through a process.

So as you get indicative offers, thereafter, you might down select a little bit more. And then you're only dealing with a sort of the right sort of handful of people that are serious, but also, they know that they've got a decent chance of actually coming through and potentially securing that business or that asset at the end.

OK.

Let's talk about pricing for a second. Because we've just--

I've just got off of--

literally, two days ago I got off a plane. We were in--

Tim and I, the co-founder of Modo, were in California at a conference and speaking to various options for fundraising. And valuations are all everyone's talking about at the moment.

Because in startups and VCs--

because public markets have taken such a hammering, that has an impact all the way down to Series Cs, Series Bs--

not so much Series A and C, but later stage. So we're OK for now.

And so multiples have been hammered. So usually you value a business on a multiple on its earnings or its revenues or whatever.

And so could you talk a little bit about that, particularly about businesses, not so much assets. I know--

I think I understand how to value an asset.

But what about a business?

Let's use an example.

Well, we just talked about Cornwall. We won't use that one. Let's talk about another business in the ether somewhere. How do you value it?

Well, so there's all various different methodologies that you can look at when valuing a business. So you mentioned multiples. And really, what that's doing is saying, let's have a look at other comparable businesses that are similar, and what do they sell and buy for, and what do they try it at? So there's that method. There's also looking at sort of things like what is the future earnings potential for this business. And you can do discounted cash flow analysis.

So there's lots of different methods that you can use to try and value a business. And which ones you use might sort of very much be dictated around the type of business that you're looking at. But I think possibly what's more interesting is to think about what do investors want, and what are they looking for when they are valuing a business?

And it's not just about what did so-and-so pay for something that looked quite similar and trying to match that. It's about I'm putting some money to work here, and I want to make a return from it. And I'm either going to make a return from it because it's going to generate some cash flows and I can take that cash and I can keep it. Or it's going to make a return because I think I can sell it in a couple of years time for more, and I can grow it in the interim.

So how they get that return will vary from an investor to investor. So your classic infrastructure fund will want long-term, stable cash flows. And that's what they'll look for in a business, and that's what they value highly. And they like that stability. And they'll sort of pay a lot and require a low return for those cash flows.

Private equity--

they like to have fast-paced growth investments, and buy in and then sell back out in a couple of years time once they've added value and they've grown that business. So when you're coming up with a valuation, you are looking at what do other things trade at. But you're also looking at the future returns and the risk in those returns for a given business.

So it's the age-old the price is what everyone's willing to pay for it.

[LAUGHTER]

Or the net present value of future cash flows, I guess.

Well, it's not just that, but--

because the future cash flows could come from a variety of different commercial decisions you've got to make. So how fast and how hard am I going to be able to grow this business? Do I believe in what's driving those future cash flows?

So is there either--

if it's an asset--

is there contractual protections in place that's going to give stability around this cash flow, and going to give me the certainty those cash flows are going to come off. If it's about a business that's going to grow fast, do I believe in the management team? Is that management team actually credible?

Do I think they know how to actually grow this business? Do they have the operational capability? Do they have the experience? Are they credible in that sense? And you'll look for that as part of trying to work out whether you think this business can actually make the money that you want it to.

OK.

The other thing I was going to mention is synergies as well and strategic. So not all the buyers are infrastructure funds or private equity or pension funds. It's worth thinking about corporates as well. And quite often, they might see strategic advantage in buying a business because it might give them capability. So as a new business, it does some whizzy optimization, and maybe they want that as part of their wider business.

Like when the aggregators got bought, and the optimizers have been bought by utilities. You want to be able to do that stuff. Yeah, absolutely.

Exactly. So it might be it might be one of those. Or they might think that they can sort of run the business in a more operationally efficient way, those sorts of things. And all of that gets factored into the value as well.

OK.

Now I want to ask you, you see a lot of deals. And that--

as I was saying, I just love saying the word deals. It just sounds very grown-up.

So you see a lot of these transactions. How--

you must see some trends when you see all these things coming across your desk--

some pricing, or sectors, or, I don't know, the winds of change. So what are you seeing across the sector in the deals you're looking at or working on?

Yeah, yeah. OK.

I guess you want to start on the big trends, and maybe some detailed ones.

Yeah, yeah. Well, the big trends are things like energy transition--

huge opportunity; more ESG investment. So those are the big macro trends.

Right now at the moment, you've also got a couple of other trends which are providing a bit of uncertainty. So things like high inflation, interest rate rises--

Putin.

Yeah, geopolitics, exactly, which provides a bit of uncertainty in in this sort of mix.

I would say for energy transition, the longer term trends will probably win through on that. I think we've got short-term disruption. But most of these investors can see the end game, can see 2050. They can see the opportunity, and they take a longer sort horizon around it.

Yeah. Who'd have thought that you could start--

if you owned development rights to a fracking site, that in 2022 in the UK September, you might actually be quitting. But anyway. Yeah.

Yeah.

But I think--

so that's one of the trends. And then I think what is also quite interesting is where investors mindsets are trending and where their preferences are trending. So we've seen, over the last few years, quite an increasing trend towards two things. One is services, and two is platforms.

On the services front, you see that come up in things like assets as a service. So when I was talking about Zenobe, for example, you've got electric vehicles there provided as a service.

We helped Equitix a couple of years ago by a business called MapleCo, which owns and rents smart meters. That's a service they're providing to the energy retailers.

You can get toilet roll as a service now, you know?

[LAUGHS]

You can. You've got toilet roll as a--

what is the one they sent me today? Toilet roll as a service and--

ah, I can't remember the one. Equally funny anyway.

Yeah, yeah. But investors like those services. And they like the services because it gives them more certainty and stability in the earnings of that business. They know there's a contracted volume of orders that are coming through and they like that. So they'll pay a higher values for service type businesses.

And that's because you've got some sort of--

I wouldn't say guaranteed, but some surety, if you like, in future cash flows because people are on a subscription.

Exactly. Exactly. So we see lots of appetite for those. And those businesses tend to attract sort of higher multiples and higher valuations the other trend I mentioned was platforms. So if you think about the energy transition broadly, there's quite a lot of small disparate assets.

So yes, we'll get--

the days of "here's a big nuclear power station"--

those still exist, but those are becoming less so. And the opportunity is a lot more in disparate assets. So you think about solar panel on your roof at home, or battery in your house, even sort of even grid-scale stuff. That is lots of assets spread across wide geography.

Quite often, you can't deploy. If you're an investor and you need to put to work hundreds of millions of pounds worth of capital, you might not be able to deploy all that capital in one go because those assets aren't there. You need to build up a portfolio.

So quite a lot of investors nowadays are looking for things like all platforms. And that's essentially the ingredients of management team operations, all the operational infrastructure that can help put assets to work and assets in the ground, giving them, maybe not on day one, but over time, a pathway towards deploying hundreds of millions of pounds worth of capital.

This is--

it's kind of gone full circle. Because I think there's a few of these companies now that have started up.

So, for example--

who's a good example?

Field. I don't know if you've come across Field.

They have essentially built a business that's got full capability across finding sites, developing them, contracting for them, building them, commissioning them, operating them, optimizing them. It's like a fully integrated company.

And 10 years ago, when I first joined Centrica, that's what Centrica was. And it was really cool because you could--

there were cost efficiencies, and you could share knowledge between the--

it was just fantastic.

And then somehow about five years ago, that became really uncool. And now we're moving back to fully integrated companies that can add value through being integrated, and they're being called platforms this time. But it's the same thing. It all goes full circle, right? And there's a few other companies that are doing it doing the same thing.

Yeah. And I think that's, though--

I think that's a function of the huge growth opportunity that's there, and the fact that all that capital can be put to work. And so that's then necessitating the build-up of these businesses that can then create the infrastructure and the machinery to then put that capital to work.

Yeah. Actually, I don't know whether--

coming back to that example. I don't know whether they're doing optimisation. I still think that everyone--

I still think that the trend is to leave optimization to a third-party optimizer. It's as if that's the bit that's a bridge too far. We're not going to go there, which is--

I can see why. Because as I've have said it a million times on this podcast, but optimization is tricky.

So there are some big trends. We talked about--

so some big tailwinds--

so net zero in that kind of environment. And then some short-term issues with geopolitics and interest rates and inflation, which is--

yeah, tricky. I mean, particularly if you're trying to build assets right now.

You get a price, and it's out of date a week later. It's very difficult to--

how do you run a business in this inflationary environment? Who knows? And you talked a little bit about platforms and services.

Now I want to give you a chance--

two things. One, which is the plug. So if you've got something you want to plug, then go for it now. And the second thing is I want to ask you more longer term around your thinking around energy transition.

What do you see in the future and what you're excited about. But I'll give you the opportunity for a plug first.

OK. So look, I think hopefully, you'll have got the impression that we really know the space around energy transition really, really well. [INAUDIBLE]

And we know that sort of right across the value chain from generation assets all the way down to including retail. And we've done deals in all those sorts of various bits in the value chain. And we're perfectly placed to know the upcoming developers, the companies, the businesses that require capital.

But also, we're constantly talking to the investors that want to put money to work. So if you have something you want to buy, something you want to sell, if you want to raise capital, then just come and speak to us.

So you guys are like Tinder, basically.

[LAUGHTER]

But you also do the photos, and you also do the bios.

Yeah, and with the financial analysis as well. So we'll check your bank statements.

Yeah, OK. Good, good. Yeah.

I'm not going to go down that rabbit hole, but that could be a paid plug-in for Tinder.

And then the second thing. So how are you and your colleagues thinking about energy transition opportunities? What are you excited about in the future?

Well, I think it's a market that is very organic. So it's just going to constantly deliver new and exciting businesses. So we've sort of seen already over the history how renewable started off as a slightly weird niche sort of generation asset and the investors are a bit unsure about it, and now it's highly commoditized, hundreds of millions of pounds, billions being deployed into renewables.

The same thing is currently happening to battery storage--

has been happening to things like smart metering. And so what I find really exciting is, one, sort of working on those deals and helping those businesses as they grow and as they move from owner to new owner. But also looking out for those new technologies, those new businesses that are going to be the next wave.

So things like--

I think there'll be longer duration storage. I think it's going to be exciting.

Hydrogen presents lots of opportunities. And I think sort of things like floating offshore wind also show quite a bit of promise as well, as well as the whole host of these technology and services businesses playing into the market and supporting that build-out.

Nice. Well, Jonathan, I think we've run out of time. I want to say thank you for coming on, and--

Thank you very much for having me.

--coming all the way into our London office for today.

If anyone's listening, you've really got to hit the Subscribe button, folks. Because I am measured on the number of subscribers we get by Izzy, our producer.

And also, please do share and do all the good stuff. It really means the world to us. If you got any comments and feedback, make sure you let us know either through the platform, or--

you know what? Just send us a letter in the post. That'd be nice. All right.

See you later. Bye.

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