OCTOBER 31 2024

Published in The Australian Financial Review

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Swedish private equity giant EQT – one of the world’s biggest buyout firms – is a lead investor in a $45 million funding round at Australian AI infrastructure start-up Neara.

The company uses AI to create a working digital replica of critical infrastructure for power companies, so they can foresee and analyse any problems, and counts Essential Energy, Ausgrid, Endeavour Energy, Powercor, and SA Power Networks among its Australian customers.

Alongside EQT, the all-equity funding round was led by Swiss critical infrastructure owner Partners Group and Melbourne-based Square Peg Capital. Scott Farquhar and Kim Jackson’s Skip Capital and Netherlands-based Prosus Ventures were returning investors. The company declined to disclose a valuation.

The company was founded in 2019, and has expanded into the US and UK over the past two years. Co-founder and chief commercial officer Jack Curtis said the company is not profitable yet, and that this financial year, a majority of Neara’s revenue will be from international markets for the first time.

He said power company Southern California Edison had been its first international client, signing up after it had faced a $500 million fine for its powerlines causing wildfires to start. It recently won a deal with CenterPoint Energy in Texas after extreme weather, including hurricanes, caused it to suffer extended power outages.

“Southern California was looking for an entirely new technology solution to manage the risk around knowing where their assets are, and knowing which trees are going to potentially encroach on the powerlines and cause wildfires,” Mr Curtis said.

“Southern California was a very big piece of work that we were fortunate to win against a fairly crowded, competitive landscape, and it then led on to a lot of other work around network resiliency.”

Mr Curtis said he had been surprised that big private equity players were keen to invest in a relatively early-stage company, but that they could see the logic in them wanting to own technology that made their infrastructure assets run more efficiently. The funding will largely be put towards its expansion in North America and Europe.

Frank Heckes, co-head of EQT Private Capital Australia and New Zealand said it was the firm’s first venture growth investment in an Australia-headquartered company.

“It highlights our ambition to support world-class platforms from early growth partnerships through to large-cap buyouts,” he said.

Square Peg partner James Tynan said it was rare to see large global PE players participating at the venture growth stage, and that the valuation had been significantly higher than previous rounds it has backed.

“It was among the most competitive [funding rounds] I have ever seen, at a very strong uplift from their previous valuation,” Mr Tynan said.

“We see it as a sign that Neara is addressing one of the world’s biggest problems: how we keep our core infrastructure running in an increasingly unstable climate.”