- Company Overview. Founded in 2021, DevvStream Holdings Inc. is a leading carbon streaming company focused on technology-based decarbonization solutions that advance the development and monetization of environmental assets. DevvStream seeks to partner with governments and corporations worldwide to achieve their sustainability goals through the implementation of curated green technology projects that are designed to improve energy efficiency and eliminate, reduce or sequester carbon emissions, through the use of carbon credits.
- Expected Long-Term, Recurring, High Margin Revenue Streams. DevvStream's Carbon Management and Carbon Investment programs will leverage a systematic approach to the process of generating carbon credits by partnering with project owners to either directly invest as a co-developer or execute project design, documentation, and certification efforts and associated costs in exchange for a substantial portion of multi-year carbon credit streams. Typical projects incur ongoing management and administrative costs during the contract term and generate recurring streams of carbon credits.
- Capex-Light Business Model Drives Attractive Cash Flows. DevvStream's current portfolio of co-development projects typically target opportunities that require limited or zero upfront capital investment. In exchange for the generation, management and monetization of carbon credits, DevvStream targets retaining a substantial portion of the carbon credits for initial contractual periods of 10 years or more. DevvStream intends to monetize these carbon credits through its network of offtake purchasers.
- Breakout Growth Driven by Current Projects. DevvStream currently has multiple projects in its portfolio expected to generate $13.0 million and $55.1 million in net revenue in calendar-year 2024 and 2025, respectively. Also, due to DevvStream's distinct business model, the Company estimates EBITDA of $6.7 million and $45.1 million during calendar-year 2024 and 2025, respectively.
- Significant and Growing Long-Term Total Addressable Market Opportunity. DevvStream participates in both compliance and voluntary carbon markets. Global compliance markets are estimated at nearly $1 trillion in volume annually, while the voluntary market was estimated at roughly $2.0 billion in 2022. Recent estimates suggest the total voluntary carbon market could reach as much as $250 billion by 2030.
- Valuation. The implied enterprise value of DevvStream at closing is approximately $212.8 million, representing an equity value of C$2.16 per DevvStream subordinate voting share prior to closing.
VANCOUVER, British Columbia, Sept. 13, 2023 (GLOBE NEWSWIRE) -- DevvStream Holdings Inc. ("DevvStream" or the "Company") (NEO: DESG) (OTC:DSTRF) (FSE: CQ0) and Focus Impact Acquisition Corp. ("Focus Impact" or "FIAC") (NASDAQ:FIAC) today announced that they have entered into a definitive Business Combination Agreement (the "Business Combination Agreement") for a business combination (the "Transaction" or the "Business Combination"). DevvStream is a leading developer and manager of technology-based carbon credits and related sustainability solutions. DevvStream seeks to partner with governments and corporations worldwide to achieve their sustainability goals through the implementation of curated green technology projects that improve energy efficiencies, and eliminate and reduce or sequester carbon emissions, through the use of carbon credits. DevvStream also helps these organizations meet their net zero goals by providing them access to high-quality carbon credits. Focus Impact is a special purpose acquisition corporation focused on amplifying social impact through the pursuit of a merger or business combination with socially forward companies. The Transaction is structured as an amalgamation of DevvStream into a wholly owned subsidiary of Focus Impact, following Focus Impact's redomiciling as an Alberta company. Focus Impact will be renamed DevvStream Corp. (the "Combined Company") and continue the business of DevvStream following the amalgamation. It is a condition of the Transaction that the securities of the Combined Company will be listed on the Nasdaq Stock Exchange, and the shares are expected to trade under the ticker symbol "DEVS".
DevvStream's business includes two distinct programs focused on the development and monetization of carbon credits by partnering with project developers to invest in, and facilitate the process of scoping, registering, validating, and monitoring projects in order to generate carbon credits.
Capex-Light Business Model Drives Attractive Returns on Invested Capital. The Company's Carbon Investment programs seek to partner with project developers and to directly invest capital into carbon emission offset or reduction projects in exchange for a substantial portion of the resulting carbon credit stream generated by the project. Typical projects targeted to be invested in by the Company are expected to generate an approximate two-year payback period, with average capital investments ranging from $500,000 to $2.5 million in size.
With regard to the Company's Carbon Management programs, DevvStream seeks to partner with developers, bringing its deep experience and systematic approach to the complicated carbon credit generation process. The Company generally seeks to invest only the costs associated with the project design and documentation of the project in exchange for a portion of the carbon credits generated.
Expected Long-Term, Recurring Revenue Stream Carries Robust Margin Profile. The Company's two expected revenue drivers consist of contractual, long-term, recurring revenue streams that are expected to continue to grow as each project is expanded and executed. The current portfolio of projects is expected to generate an estimated $13.0 million and $55.1 million in net revenue in calendar-year 2024 and 2025, respectively. As the current project portfolio is developed, the associated revenue streams are expected to drive robust growth and expand margins with limited incremental cost. Due to DevvStream's distinct business model, the Company estimates EBITDA of $6.7 million and $45.1 million during calendar-year 2024 and 2025, respectively. As DevvStream continues to advance its current pipeline of contracted projects and over 140 identified projects, management expects to see substantial upside to its forecast.
Total Addressable Market Poised for Rapid Growth. The total global carbon market, including both compliance-based and voluntary carbon credits, is estimated to have been nearly $1 trillion in 2022, which is largely dominated by the compliance market. The global compliance-based carbon market has historically been characterized by premium pricing and significantly lower volatility for carbon credits generated under this framework. These characteristics, which reflect the more developed and mature state of this market driven largely by the uniform regulatory framework governing most of this market, provide an enhanced level of reliability, predictability and general transparency. DevvStream expects the majority of its forecasted 2025 revenue will be driven by compliance-based credits; however, the rapidly expanding voluntary carbon market also presents a substantial opportunity.
While the voluntary carbon markets remain largely unregulated, the recent launch of a new regulatory framework earlier this year, known as Core Carbon Principles, by The Integrity Council for the Voluntary Carbon Market, an independent governance body for the voluntary carbon market, marks a notable shift towards dramatically improved standardization, reliability and transparency in the voluntary carbon markets. Recent estimates suggest that the voluntary carbon market could reach as much as $250 billion by 2030.
Management Commentary
Sunny Trinh, CEO and co-founder of DevvStream, commented, "Entering into a definitive agreement to merge with Focus Impact is a significant step towards accelerating the growth of our differentiated technology-based approach to carbon markets. With the added financial strength, improved visibility and coverage, and improved access to capital markets, we believe we are well-positioned to execute on our current project portfolio and continue to advance our deep pipeline of opportunities towards development, with the goal of becoming the leader in technology-based solutions for carbon markets." Mr. Trinh continued, "Bringing new technology and enhanced transparency to the voluntary carbon markets should also help drive increased reliability, accountability and accessibility to the broader carbon markets, thus accelerating participation and driving a meaningful impact to reducing global carbon emissions."
Carl Stanton, CEO of Focus Impact, stated, "Our proposed merger with DevvStream presents a significant opportunity to create substantial value for our shareholders as the DevvStream team executes on its current project portfolio, while simultaneously working to help carbon development partners and purchasers meet their sustainability goals. The Company has a systematic approach to the design, validation, and verification of technology-based carbon credits, including its blockchain-based, Environmental Asset Management Platform and its significant intellectual property ...