KKR Partners With EGC To Lead Real Estate Decarbonization

Global investment company KKR has signed a strategic partnership with Düsseldorf-based energy services provider EGC to make the company a top decarbonization partner in the real estate sector. ITG, an engineering services provider, will join the partnership under this association, further enhancing the capabilities of EGC.

This collaboration represents an important milestone towards the decarbonization of heating systems in buildings, an important element of combating climate change. Buildings emit around one-third of the world's CO₂, primarily as a result of legacy heating infrastructure. By expanding its energy services business, EGC will contribute to enabling landlords to achieve the European Union's climate ambitions.

The founding family and current shareholders will maintain an ownership stake in the company and actively continue to participate in its management. Of particular note, former GETEC Group CEO Michael Lowak will become Chairman. Having significant industry experience, Lowak is likely to lead EGC's strategic path and drive its growth in the decarbonization market.

"The partnership with KKR creates entirely new opportunities for us to continue to build on our solid market position," stated Corinna and Dirk Pitz, EGC's management members. "We have identified a partner who shares our strategic ambitions as well as entrepreneurial spirit."

Decarbonization at the Core

EGC, a family-owned business of the second generation, is engaged in integrated energy solutions, providing services that span from planning and financing to operating energy systems. The company currently operates two million square meters of property and has approximately 800 heating units. With the backing of KKR, EGC will increase its presence and improve its capacity to deliver sustainable heating solutions to more buildings in Europe.

Newly elected Chairman Michael Lowak spoke of the importance of the role played by the company in speeding up real estate decarbonization. "EGC empowers landlords to organize, execute, and fund the decarbonization of their portfolios efficiently," he explained. "The company is making a material contribution to both the German real estate sector and the country's energy transition."

Heating systems continue to be among the biggest contributors to building emissions, so their modernization is crucial for carbon neutrality. As tighter EU climate regulations are on the horizon, demand for decarbonization technologies will grow dramatically. EGC's knowledge in this area, paired with KKR's investment strength, will be a compelling force for making the shift towards cleaner buildings.

KKR's Commitment to Sustainability

KKR boasts a robust investment history in infrastructure and energy transition assets. KKR has currently around $77 billion of infrastructure assets under management globally. As part of this collaboration, KKR will bring its global track record and capital to assist EGC's development, both organically and acquisitively. This investment is part of KKR's overall Global Climate Strategy, focusing on investing in sustainable solutions that power the low-carbon economy.

Ryan Miller, Managing Director within KKR's European Infrastructure business, highlighted the importance of long-term capital and innovation in the industry. "To drive the energy transition in Germany at the required speed, we require innovative solutions and long-term capital," he stated. Through the provision of its financial resources and strategic acumen to EGC, KKR looks to drive the decarbonization of the real estate sector at a scale that is required in order to reach Europe's climate objectives.

Employee Ownership Model

Perhaps the most significant feature of KKR's strategy is its emphasis on broad-based employee ownership. Under this partnership, KKR will introduce an employee ownership model at EGC, where the employees are actively involved in determining the future of the company and reaping the rewards of its success.

This model has already been implemented successfully in 60 KKR portfolio companies globally, spanning more than 150,000 non-management employees. By providing a direct stake to the employees, KKR seeks to create an environment of innovation, commitment, and long-term growth.

The joint venture of KKR and EGC points to an increasing trend of investment firms collaborating closely with family-owned companies to implement sustainable transformation. Germany's transforming energy landscape offers tremendous potential for businesses such as EGC, and with the support of KKR, the firm has the potential to position itself as a real estate decarbonization leader.

With the imperative to tackle climate change growing, investments in sustainable infrastructure and energy efficiency will be paramount. EGC's augmented function of decarbonizing heating systems will not only serve property owners but also help achieve the wider cause of lowering global carbon emissions. By way of strategic investments, creative solutions, and employee mobilization, KKR and EGC will play a leading role in determining the future of sustainable European real estate.