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A Strategic Energy IT Deal

July 7

Global Energy Decisions (GED) is back in M&A news for the second time this year, now for what looks to be its most important deal yet, the purchase of KWI.

KWI, generating sales of about $15 million, sells energy trading and risk management (ETRM) software used by utilities to manage their fuel purchases and reserves. GED is an energy industry data and software mini-conglomerate headed by Ron McMahon (founder of RDI, a coal industry database vendor he sold to Platts), and funded by private equity investor Quadrangle Group. Another investor group, Insight Venture Partners, owned KWI equity and has “rolled” at least some of its KWI position into GED.

Last December, GED bought the Couger and GIMSplus software unit from ABB. ABB’s Couger software models electricity generation operations while GIMPlus supports wholesale trading settlement. Before that, GED had picked up MS Gerber, vendor of risk analysis and forecasting tools for electric utilities. And before that, it bought Henwood Energy, Energy Velocity, AcuPower and EnerMap, all this since mid-2002.

GED’s purposeful and regular acquisitions add up to, among other things, a formidable energy industry ETRM suite competing against the offerings of a consolidating group of other leaders including Allegro, OpenLink Financial and SunGard Energy (formerly, Caminus). However, GED retains an advantage through its focus on the management of physical fuel commodities versus many other players’ financial trading orientation.

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