Vehicle electrification solutions provider XL Fleet has acquired Spruce Power, an owner and operator of residential rooftop solar systems in the US with more than 52,000 subscribers across 16 states.
The Texas-based company was acquired from funds managed by investment firm HPS Investment Partners for a total cash consideration of approximately US$58 million and the assumption of approximately US$542 million of debt.
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Formally known as Spruce Finance, Spruce Power sells the power generated by its systems to homeowners, pursuant to long-term agreements that obligate subscribers to make recurring monthly payments. Its revenues have more than doubled since 2019, driven primarily by the acquisition of 10 rooftop solar portfolios.
According to XL Fleet, Spruce Power has grown by acquiring portfolios of residential solar systems from other companies and investors rather than selling individual systems to homeowners through a direct-to-consumer salesforce – an approach that has allowed it to keep its customer acquisition costs low and generate consistent earnings.
XL Fleet CEO Eric Tech said the subscription model gives consumers access to new technology without making a significant upfront investment or incurring maintenance costs while enabling the service provider to earn recurring revenues.
“The combination of Spruce’s existing subscriber base and proven servicing platform with our capital and small business relationships positions us to take advantage of rapid growth in rooftop solar, energy storage and electric vehicle adoption,” he added.
In connection with the acquisition, XL Fleet has shifted its corporate strategy to provide subscription-based solutions for rooftop solar, battery storage, electric vehicle charging and other distributed energy resources, while it also intends to change its name.
To support the new strategy, Spruce Power CEO Christian Fong will replace Tech as CEO of XL Fleet by February 2023.