Fri, 10 Feb 2017 | BUSINESS SALE
UK small energy supplier Flow Energy has been put up for sale after its owner warned that competition from new suppliers offering cheap tariffs threatens to block its growth.
AIM-listed Flow Group confirmed in a statement it would “actively pursue” the sale of its energy arm after receiving “a number of approaches expressing interest”.
Established in 2006, Flow Energy is Flow Group’s household gas and electricity supply business with around 270,000 customers. It is one of the main challengers to the so-called Big Six suppliers.
Flow Group said while its energy business had “progressed well” and is “delivering growth”, its gross margins have come under pressure as it was forced to compete with new rival suppliers offering cheap tariffs.
“Recently, gross margins have come under pressure as we have priced to compete with a range of new entrants offering reduced tariffs to customers to gain market share,” the company said.
“We are investigating several new routes to market to reduce our reliance on the price comparison sites and we regularly review our pricing strategy as the market continues to move and evolve.
“However, if the trend of new entrants offering reduced tariffs persists, we would expect our growth outlook for 2017 to be more challenging.”
Flow Group said it would try and use funds from a sale of Flow Energy to launch its micro combined heat and boiler power business in Europe.
Analysts at Cantor Fitzgerald told the Times that Flow Energy could pique interest “from both new entrants and existing players”, valuing the business at £73 million.
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