Successful investment marks venture firm’s seventh exit in seven years

HOUSTON/STAVANGER – Energy Ventures III LP has announced that FMC Technologies, Inc., a global provider of technology solutions for the energy industry, has signed a definitive agreement to purchase California-based Direct Drive Systems, Inc. (DDS) in a transaction valued at $120 million. DDS, established in 2004, produces high-speed, high-power permanent magnet motors and generators, as well as magnetic bearings, for the oil and gas industry.

Energy Ventures, an independent specialist venture capital firm to the upstream technology space, has worked closely with DDS since leading the $12 million B round in the company in January 2008. DDS’ motors are expected to be particularly valuable in the subsea market, where they stand to be an enabling technology for subsea boosting and gas compression. The technology is also relevant for top side facilities and onshore markets, where it has the potential to replace many of the aging motors and generators on which the petroleum industry depends today.

“Energy Ventures has made major contributions to our business over the last year, providing us with value beyond just funding,” said Kevin McGlensey, CEO of Direct Drive Systems. “Energy Ventures’ knowledge of the oil and gas industry and the breadth of their reach in the industry helped us to develop an appropriate space for our technologies and allowed us to leverage their high-level contacts with the key technology adopters.”

DDS’ products provide significant efficiencies and cost savings for operators working in the shipping, natural gas and offshore industries. The company’s highly efficient motors and generators can turn up to 12 times faster than conventional motors, and can be directly coupled to turbomachinery without the need for a gearbox. This provides a power to weight improvement by up to a factor of ten.

“DDS is a perfect example of the kind of technology we look for in our investments,” said Leif André Skare, partner at Energy Ventures. “DDS’ innovative offerings and experienced management team allowed us to focus our efforts on finding this technology’s place in today’s energy market. We believe this is a value-driving event for all parties involved in the transaction.”

Link to Houston Business Journal "Energy Ventures fund sees first in, first out as FMC Technologies buys portfolio firm" - click here