Swiss electrical equipment giant ABB has jumped feet first into the smart grid with the purchase of software maker Ventyx (from Vista Equity Partners) for over $1 billion, the companies announced this morning. Ventyx — which was created by various mergers of energy and telecom companies that have been around since the 1970′s — makes software for energy analytics and operations, forecasting, mobile workforce management, and risk management, among other applications. The company was bought by private equity firm Vista Equity Partners in the mid-2000′s and reported annual revenues of about $250 million in 2009.
The fact that ABB would want Ventyx’s software to smarten up its electrical equipment isn’t surprising. ABB competitors, like Siemens and General Electric, have been moving in the same direction. Over the past year Siemens has announced a flurry of new projects and partnerships looking to add on smart grid software, and has a goal to double its current growth rate in the smart grid sector to capture €6 billion ($8.48 billion) in global business over the next five years. That compares to current estimates of €1 billion ($1.41 billion) for revenue related to smart grid initiatives in the fiscal year ending September 2009.
ABB plans to fold Ventyx’s software into its current products to make one energy management software solutions unit. The strategy for ABB — as well as Siemens and GE — is to be able to offer a utility customer both its electrical gear as well as various smart grid management solutions. As Dave Pacyna, senior vice president of Siemens Energy’s North American transmission and distribution division, told us in an interview earlier this year: There is a confusing array of different equipment, networking and other technology vendors supplying products for smart grid projects, and Siemens would like to provide utilities with a few key pieces of software to manage them all.
The acquisition is also yet another sign that the smart grid is the place to be if you want to get bought and sold in greentech. Whether it’s large IT companies like IBM or Cisco that are looking to buy their way into the smart grid market, or older energy players like EnerNOC, seeking to expand through innovative startups, the smart grid has had more than its fair share of M&A activity this year. The massive market opportunity (which Cisco predicts will be bigger than the Internet) has even convinced more conservative electric gear companies, like ABB, to become more aggressive in acquiring companies — as Bloomberg notes, Ventyx is ABB’s first major purchase in more than a decade.
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Image courtesy of Siemens.