Synertec Corporation Ltd has invested in and formed a strategic partnership with PHNXX Pty Ltd, a Victorian company developing low-cost agricultural solutions for its containerised battery energy solar system.
SOP said the PHNXX battery system was targeting different markets to Synertec’s industrial Powerhouse standalone battery and power system solution for remote areas but that the two technologies had strong synergies with complementary market applications.
To that end, Synertec will make an investment valued at $1 million in PHNXX, consisting of a $500,000 cash payment and several in-kind payments and contributions equalling the remaining $500,000. The agreement is evergreen, with no set end point.
Opportunity for mutual success
“This investment allows Synertec exposure to market sectors that we would not otherwise have,” Synertec Corporation managing director Michael Carroll said.
“Powerhouse operates in the high-end, highly critical sectors typical of oil and gas while PHNXX operates in the smaller, less critical sector, typical of say, the agricultural sector.
“PHNXX has great experience and relationships in China and a large target market in Australia.
“We will leverage their China-based experience to drive our costs down and profit by supporting them in fulfilling their aspirations.
“Our sales teams are already collaborating on numerous opportunities and PHNXX is making introductions in Southeast Asia that directly align with Powerhouse.
“By working together, we will be able to leverage the best of all companies. I am looking forward to working with Engie Factory and the PHNXX teams to our mutual success.”
SOP will own 9% of PHNXX once the full $1 million investment is made, which will involve:
- A$250,000 payable by Synertec on the initial completion date, expected to be around mid-March 2025.
- A$250,000 (in kind) representing the grant of an IP licence to PHNXX for the use of Synertec’s microgrid control system under an IP licence agreement entered into between Synertec and PHNXX.
- A$250,000 (in kind) credit in favour of PHNXX for engineering development work undertaken by Synertec in customising its control system to Phnxx’s requirements.
- A$250,000 payable by Synertec by July 13, 2025, or such other date as agreed by the parties.
Details of partnership
The two companies believe the following benefits will be possible through the strategic partnership:
- Software as a Service - Synertec Engineering will adapt certain Powerhouse control system modules for use in PHNXX systems for a mixture of upfront and recurring revenue. Synertec expects Software as a Service to be a recuring income stream.
- Exposure to large market segments not targeted by Synertec - PHNXX will target agriculture, including dairy farms and applications that have sizable cool rooms.
Remote communities are also expressing interest in the PHNXX technology. The market opportunity for small applications is large and identifiable.
- Cross Company Sales Cooperation - The collaboration will allow Synertec to refer and recommend PHNXX applications and earn upfront and recurring revenue from the licensing of the modified Powerhouse control system installed on each PHNXX unit sold.
Conversely, PHNXX will refer and recommend opportunities that are more suited to Powerhouse. This cross-referral arrangement will expand the opportunities for each company by having both company's sales teams focused on selling the broader range of products.
- Cost-out of supply chain - As Synertec looks to grow its Powerhouse orders, there are potential benefits in accessing the existing supply chain of PHNXX and leveraging its relationships and experience in low-cost manufacturing jurisdictions.
PHNXX and Synertec will also cooperate to use common componentry and fabrication facilities to drive costs down.
Under the partnership, Synertec will be entitled to 50% of the gross profit PHNXX earns from the sale or lease of products by customers referred by SOP and a one-off integration fee and an ongoing annual subscription fee for each licensed product that is sold or leased regardless of referral.