In their article Can private equity save the world?, Will Jackson-Moore and Vicki Kerrigan argue that private equity firms can help lead decarbonisation by providing capital to companies working on sustainability. And thanks to a drone-based solution that has emerged in response to COVID-19, funds can help rescue planet Earth not only through what they invest in, but also by how they do business.
Remote Asset Insights (RAI) solution uses unmanned aerial vehicles and data technologies to reimagine the site visits that are necessary as part of most acquisitions. Even when restrictions ease, the solution will likely stick around, helping shrink PE investors’ carbon footprints.
But won’t people want to get back to travelling and seeing assets with their own two eyes once the pandemic is over? Our answer is “not necessarily” – while there still may be a preference for a physical inspection for some assets, RAI has disrupted the way sellers tell their asset value story to buyers. Like many innovative solutions emerging from the pandemic, RAI has not only digitised the process, but enhanced it.
“In one day, you can see multiple sites, compared to what almost seems old fashioned and very carbon intensive,” Will Jackson-Moore, our Global Private Equity, Real Assets and Funds Leader, said during a live demo webcast in December with representatives of two clients, Coty and Nestle. “With this technology we’ve got the ability to see it on our laptops, in a meeting room.”
The tool combines images from drones with data analytics and data imaging technologies, delivering an experience that offers more than the human eye can capture during any site visit. Fundamentally, RAI overcomes limitations of space and time: A group of managers anywhere in the world can see the facility for themselves rather than having to rely on reports from a site visit team; they can also watch the video whenever they want, as often as they want.
The new tool transforms buyers’ understanding of the assets they’re looking at, said Brian Campbell, acquisitions and business development manager at Nestle. “We understood the value of those sites, we could see that and we could assess that in detail ourselves in advance,” he said. “It has actually enabled us to think differently about how we might do things in the future.”
RAI allows viewers to see both the inside and the outside of the factory, including difficult to reach areas and those where special safety precautions would be required, and can deliver overhead perspectives that human visitors would be unable to capture. This wealth of visual information includes precise locations for particular machines and production lines – allowing measurements that can be fused with data from other sources, all delivered in a secure environment. With the help of wide-ranging satellite archives, historical images from as far back as 15 years can be integrated to portray changes in the site over time. In most places, remote site visits can be arranged with a lead time of 2-4 weeks.
“COVID has demonstrated that agility is more essential than ever, but through that you just gain greater speed to value,” said Eliza Simeonova, VP for supply chain transformation at Coty.
All of that means tools like RAI are here to stay. Of course, the initial results indicate that in-person visits to meet will still be necessary; drones may be great at capturing images of production lines, but they can’t necessarily replace human contact with managers. However, the solution means travel can be reduced only to meetings with top people and critical facilities. Our long-term goal is to create a fully transparent digital process, which offers the prospect of fully objective and data-driven decision making.
With the majority of funds and asset managers officially pledging that sustainability will drive their operations going forward, they’ll need to look not only for ways to decarbonise their portfolios, but also to lead by example in their own operations. RAI provides a powerful tool for putting deal-making on a more sustainable path, while at the same time delivering a secular shift in the quality of the process.
