OpEx Awards 22: EMEA Upper mid-market winner – Three Hills Capital Partners

Three Hills Capital Partners worked closely with sustainability solutions provider ACT to create value through enhanced R&D capabilities.

Three Hills Capital Partners’ investment in ACT was described by one judge as being “a great example of how deliberate investments into research and development capabilities and a partnership with the management team enable operational improvements and financial outperformance”.

ACT is a leading global provider of market-based sustainable energy solutions. Among other products, ACT provides CO2 certificates, renewable energy certificates, physical biofuels and biofuel tickets to a wide range of clients across the world, including companies in industrials, utilities and transport.

Following its investment in 2018, THCP used its global reach to support ACT’s expansion in the US, France and Asia, where the company set up new offices, and worked side-by-side with ACT on its first ever acquisition in the biofuels space.

THCP also strengthened ACT’s management team to support long-term growth. It achieved this by adding key talent to the top of the business, such as a head of US operations and a supervisory board chairman, as well as introducing a management incentive plan that added more than 20 key managers to the shareholding structure through a newly introduced partnership model.

As identified by the judging panel, ACT’s in-house R&D capabilities were particularly strong contributors to the company’s growth. By setting up a dedicated R&D team within the organisation, THCP helped ACT to institutionalise knowledge within the firm and sharpen its competitive edge by continuously tracking the latest regulatory developments and market opportunities to develop new products and solutions for clients. During THCP’s investment period, the R&D team grew to comprise nine experienced industry experts, who developed seven new product groups that contributed a significant proportion of revenue at the time of exit.

The firm drove further operational improvements via investments in ACT’s HR function and IT capabilities, as well as optimising financial costs and controls, for example by optimising working capital management through a bespoke asset-based lending facility that expanded the company’s working capital line at a significantly reduced cost. THCP also initiated a project to develop a unique insurance solution, covering ACT’s counterparty exposure throughout a transaction’s lifetime.

In addition, THCP worked with ACT to increase the proactive education of its clients on all relevant aspects of reaching their climate targets, with multiple managing directors joining specialist industry boards, such as the International Emissions Trading Association, to share their expertise.

The GP exited in March 2022, following an investment from Bridgepoint that valued the business at more than $1 billion.

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