A New Company, Familiar Products
By Jack Burke07 November 2018
What was GE Distributed Power—with the Jenbacher and Waukesha Engine product lines—is now known as INNIO.
Advent International’s purchase of the two reciprocating gas engine manufacturers, digital platform and related services offerings also includes the engine maker’s main operating sites in Austria, Canada and the United States.
“This is an exciting time to emerge as a stand-alone energy company,” said Carlos Lange, president and CEO of INNIO. Lange also served as president of GE’s Distributed Power business. “With the continued growth of renewables across the globe and the increased emphasis on energy efficiency, INNIO is well-positioned to be a key enabler and integral part of the energy transformation.”
He said there are three mega-trends—the three Ds—emerging in the energy market: Decarbonization, Decentralization and Digitalization.
Lange said INNIO anticipates growth to be a mid to high single-digit rate per year for both brands in the US$5 billion global gas engine sector. The company’s range of industrial gas engines covers 200 kW to 10 MW. Headquartered in Jenbach, Austria, the business also has primary operations in Welland, Ontario, Canada, and Waukesha, Wisconsin, USA.
According to the company, the INNIO name is a combination of the words Ingenuity, Innovation and Inspiration.“We wanted a name that we felt was simple, was ownable, was compelling, was engaging,” said CEO Carlos Lange. “We wanted a name that speaks to what we stand for, which essentially is ingenuity, innovation and inspiration.” He said the idea of sustainability is reflected in the letter O, which incorporates both the green synonymous with Jenbacher and the orange of Waukesha Engine.A stylized lightning bolt is visible in the two Ns, which is designed to represent strength and to connect to the company’s role in providing energy.
Renewables—Decarbonization—make about two-thirds of every MW of installed capacity—up from 30-35% just a few years ago, Lange said. Decentralization reflects the demand for energy production near the point of use while Digitalization means both a demand for digital solutions for end-users as well the growing power needs of the digital economy.
“We expect growth to come from all of the segments that were playing in, that’s along power generation as well as gas compression,” he said. “I think that we’ll be able to grow both on the unit side as well as on the services side.”
Lange said the midstream oil and gas segment will continue to be a key market for the company, particularly for the Waukesha Engine brand. He said growth in the oil and gas market—especially in the U.S.—has been “massive” and expects it to continue.
“These are massive tailwinds for our Waukesha business, which focuses primarily on compression and transporting gas from point A to B,” he said. “So overall these trends… the three Ds, the massive build-out of the gas infrastructure are strong trends for our business today and in the future.”
On the power generation side, INNIO is positioning itself as a “perfect complement” to the growing use of renewable energy sources. The company sees opportunity for the business because of ongoing changes in the energy industry driven in great measure by the increase in alternative power. With renewable sources of power growing at double-digit rates, the need for reliable, flexible energy to back up renewables—including INNIO’s products—will increase as well.
“Really, when the sun doesn’t shine, the wind doesn’t blow, we are right there for our customers,” Lange said.
Digitalization trends also bode well for INNIO. Lange said that between 5 and 10% of electricity consumed in the U.S. goes into data centers and that demand will only increase over time.
“That’s what’s driving, obviously, the growth that we’re seeing in the data centers and because they are growing so fast sometimes the grid is not able to support their growth,” Lange said. “Customers are looking for the cleanest possible solution for prime power or even sometimes for backup power.”
The company is also betting on continued growth from servicing engines already in the market.
Lange noted that the company recently shipped its 20,000th Jenbacher engine and between the two brands has more than 48,000 units in the field.
“So with that growing fleet, for us, it’s a strong revenue growth as well,” Lange said. “Which also gives us more resiliency.”
The US$3.25 billion sale of GE’s reciprocating engine portfolio was announced in June. Other bidders reportedly included Cummins and Kohler.
“It is a great pleasure to accompany INNIO as it emerges as a stand-alone energy company,” said Ranjan Sen, managing partner at Advent International. “The Jenbacher and Waukesha product brands and technologies are recognized worldwide for their performance, reliability and technological excellence. We anticipate continued sustained growth in power generation and gas production technologies on a global scale.”
Founded in 1984, Advent International is a global private equity firm. With offices on four continents, the company has a team of more than 190 investment professionals, focused on buyouts and growth equity investments in five core sectors: Business and financial services; healthcare; industrial; retail, consumer and leisure and technology, media and telecom. Some of the companies in its portfolio include Culligan, Axtone, a manufacturer of buffers and drawgear devices for rail vehicles, Boart Longyear, a provider of drilling services, tools and equipment; Walmart Brazil Group and Noosa Yoghurt.
Since initiating its private equity strategy in 1989, the company invested US$42 billion in over 340 private equity investments across 41 countries, and as of June 30 managed US$41 billion in assets.