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HydrogenOne portfolio continues to perform despite widening discount

HydrogenOne announced its quarterly net asset value and portfolio update for the period ended 31 March 2023. The company NAV grew 2.8% over the quarter and is up 3.3% year on year. Despite the positive NAV returns, shares were down more than 40%, although they are up 24% since the beginning of May.

Some of the key highlights for the quarter include:

  • Positive industry outlook underpinned by macro tailwinds in the hydrogen sector and supportive regulatory regimes in the USA and Europe. UK government selection of 20 green hydrogen projects as funding candidates announced in the quarter;
  • Increased valuations in both private and listed hydrogen assets compared to 31 December 2022; NAV includes 1.14p reduction for accrual of carry;
  • First investment in a clean hydrogen production project in Germany; £2.5m commitment;
  • Investments in the quarter totalling £5.4m;
  • Cash and cash equivalents of £12.5m, and £3.8m of listed hydrogen companies at the end of the quarter;
  • The company hosted a Capital Markets Day, which included presentations from the management teams of each of the private portfolio companies.

The update also highlighted the current growth within the portfolio with eight of the company’s ten private investments, representing 93% of its invested portfolio by value, already generating revenue, producing equipment and technology solutions for clean hydrogen production. These companies delivered an aggregate £40m in total revenue in the 12 months to March 2023, an increase of 107% compared to the 12 months to March 2022.

[While not extreme, the NAV returns are a positive sign for the company which has battled with the wider risk sell off over the past 12 to 18 months. Despite this, the continued performance of the underlying portfolio continues to impress and reinforces our view that the stock has been somewhat harshly treated. With shares trading at a discount of almost 50% we believe there is considerable value for the long term investor.

HEGN : HydrogenOne portfolio continues to perform despite widening discount

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