Appraising Aggreko: How private equity has changed the world’s largest temporary power provider

Last week marked three years since private equity firms I Squared Capital and TDR Capital acquired Aggreko, the world’s largest temporary power company, in a £2.3 billion deal.

In that time, the Scotland-headquartered global business, has been through many changes, pursuing a strategy of concentrating more on North America and Europe, targeting larger corporate clients and securing longer term contracts.

Earlier this month, Aggreko published its 2024 results, highlighting the changes made since its de-listing. Here’s what we found out: 

1. Aggreko’s private equity owners looking for an exit?

For the US and UK based private equity firms which acquired Aggreko in 2021 through their Albion JVCo investment vehicle, it’s certainly a good time to highlight the value enhancing strategies they have implemented at Aggreko.

PE firms typically aim to acquire companies, improve profitability and then exit the investment within a period of three to seven years. Reports by Bloomberg last September suggest that I Squared and TDR are currently weighing various alternatives including selling a minority stake, a full sale or an initial public offering, which could value Aggreko at US$10 billion.

However, since then, stock market swings related to tariffs are threatening to upend planned PE exits this year with analysts suggesting that fewer buyers are likely to come forward than had been expected at the start of the year.

2. Revenues and profits are up

Photo: Aggreko

Certainly, there’s plenty in Aggreko’s 2024 accounts to suggest that the company’s owners have achieved the things they set out to do.

Aggreko said that since the 2021 take-private, revenue had increased by 50% from US$1.9 billion to nearly US$2.9 billion. And, in 2024 alone, sales topped $2.85 billion, a 14% increase over the previous year.

To do this, the private sector investors have pursued an M&A strategy, especially in Europe and North America. It has invested $600 million in M&As since 2021 and in 2024 alone it bought five businesses.

The biggest deals were for temperature control company Resolute Industrial and loadbank specialist Crestchic, both in 2023, and last year’s deals included UK-based Powerline, a specialist in events power, Slovenia-based energy efficiency company Resalta, and two community solar energy projects in New York State.

Aggreko also said that it was reducing its reliance on small contracts (under $10,000) and targeting larger, more lucrative contracts in Europe and North America.

However, the consequence of this is that the company has pulled away from countries and contracts which it considers to be higher risk and has slashed central overheads.

According to Aggreko, company profits since the take-private have increased 120%, with EBITDA growing from $0.5 billion three years ago to $1.1 billion. Meanwhile, EBITDA margin grew from 27% in 2021 to 39% last year.

Last year alone, pre-tax profits almost trebled from $115 million to $329 million in 2024 while EBITDA profit was 16% higher at $1.1 billion.

The company said that since 2021 it had put in place a cost savings programme which had amounted to cumulative savings of $132 million. To do this each region was asked to produce a monthly cost dashboard which included standardised reporting of headcount for both direct and overhead categories to ensure constant monitoring.

Local leadership teams were then encouraged to conduct detailed reviews of cost performance to look at ways of reducing overheads. Measures included improving the efficiency of the design of the organisation, cutting third party spending, and transforming its HR and finance functions.

Aggreko said overheads as a percentage of revenue reduced from 28% in 2021 to 21% in 2024. Despite reducing central overheads, the average number of permanent employees grew from 5,868 to 6,863 with increased hiring in technical, engineering and sales roles.

3. Exiting higher risk markets, focusing more on North America and Europe

Photo: Aggreko

The company said revenue from North America and Europe now represented 58% of revenues compared to 48% in 2021.

Revenues in North America have doubled since 2021 - and now exceed $1 billion - and by 74% in Europe to $581 million.

As part of this re-focus on developed markets, it is exiting 24 countries with “elevated risk profiles”, many of which are in Africa. It says 17 have already been exited and seven more are on the way. Revenues in Africa last year $190 million, down 25% on 2021.

Most pressingly, it has finally found a buyer for its Eurasian power rental businesses in Russia and Khazakhstan, which the company has been looking to divest since sanctions were imposed on Russia following its invasion of Ukraine in early 2022.

Aggreko has agreed to sell the Russian business to an unnamed third party for $29 million and the Khazakhstan business to the same party for $8 million. Albion JVCo, Aggreko’s owner, said it would take an impairment charge of $82 million on the sale if completed.

Nonetheless, despite the exits, Aggreko said it continues to operate in around 75 countries.

4. Fleet spending has gone up a lot – especially in Europe and North America

Aggreko says that capital expenditure on its fleet has increased from $265 million in 2021 to $702 million.

Moreover, if you look more closely at where the money is being spent, investment in fleet based in Europe and North America has increased even more significantly, from 56% of the total in 2021 ($161 million) to 72% in 2024 ($522 million).

A lot of this spending is growing rather than simply replacing the fleet: of the $702 million, $467 million was growth CapEx while $235 million was maintenance CapEx.

It says it has set a goal of more than 50% dollar utilisation for any new investment. The figure was 40% in 2021 and 47% last year.

5. Decarbonisation and the AI boom will push up demand

The company predicts overall electricity demand to increase by two and a half times over the next 25 years, driven by decarbonisation of existing industries and a growth in new industry power needs, especially those of data centres. The company reports increases in demand from data centres in North America, Europe and parts of Asia.

At the same time, the company is forecasting a 1,000GW shortfall in generation capacity by 2030, along with problems of intermittent supply cause by increased reliance on wind power. When renewable energy exceeds 40% of grid capacity, says the company, you get rising demand for additional capacity through temporary or semi-permanent power.

6. Progress on carbon emissions?

Aggreko aims to decarbonise its facilities and operations to net zero by 2035.

It is making some progress. Scope 1 emissions (from its buildings, vehicles etc) have decreased between 2021 and 2024 by 23%, mainly as a result of reducing emissions associated with refrigerant gas losses.

Its scope 2 emissions - such as the energy it purchases from the grid - have decreased by 65% due to green electricity supplied to Aggreko locations in the UK, Belgium, Sweden, Romania, Spain and the Netherlands, plus the purchase of Renewable Energy Certificates to cover the majority of electricity consumption in North America.

Both Scope 1 and Scope 2 emissions are heavily outweighed by Scope 3 emissions, the vast majority of which (98.8%) are generated by the equipment it rents to customers. There has been a 9% reduction in Scope 3 between 2021 and 2024, driven by increased use of energy storage and renewables in its fleet, as well as the use of cleaner fuels by customers and investment in cleaner equipment (such as Stage V gensets).

Carbon reduction actions have included the installation last year of a 2MW battery energy storage system at its manufacturing facility in Dumbarton, UK, allowing it to operate at over 50% self-sufficiency. It has completed the design of a similar system for its Houston facility.

Also in 2024,  it installed more than 250kW of solar power across four facilities in Australia and at its Johannesburg facility in South Africa. A further 515kW of solar power will be fully installed in early 2025 at facilities in North America, Panama, India and the Philippines.

All its facilities in the UK, Netherlands and Belgium were powered by renewable electricity in 2024. The company said it was exploring opportunities to transition facilities in Europe, Latin America and Asia Pacific to renewable electricity.