HydrogenOne Capital Growth has announced a change to the corporate structure of its invetsment in HH2E (the German developer of hydrogen production plants).
HH2E is backed by HydrogenOne and Foresight Group (including JLEN Environmental Assets). They have investments in HH2E itself, and separately into project-specific special purpose vehicles (SPVs) managed by HH2E. HydrogenOne has invested alongside Foresight in the Thierbach SPV and Foresight has also invested in the Lubmin SPV. In addition, HydrogenOne and Foresight together have development rights on a further four green hydrogen project SPVs, through their investment in HH2E.
The company has now signed agreements, subject to customary completion, alongside Foresight and other investors in HH2E, to streamline the HH2E business, ahead of upcoming external funding rounds to bring green hydrogen projects into production.
Accordingly, the investment rights in all six green hydrogen project SPVs will be exchanged for HH2E equity, in a non-cash transaction for HydrogenOne. In addition, the development loan that HydrogenOne had provided to Thierbach (of which £1.9m has been drawn), will be reduced to £0.7m, through a swap for equity in HH2E. HydrogenOne’s resulting equity share of HH2E is unchanged, at around 11%, on an enlarged asset base, with a simpler corporate structure.
The deal also provides the company with exposure to an additional green hydrogen project, Lubmin, which is progressing towards its Final Investment Decision. The project is currently expected to be for 100MW input power, producing 7,000 tonnes per annum of REDII-compliant green hydrogen from 2026.
At 31 December 2023, the company’s investment in HH2E and Thierbach represented 6% of the NAV. The investment adviser expects that the deal will be accretive to its valuation of HH2E as projects move into development.
[QD comment: We are eagerly awaiting the greenlighting of the first of these. As HydrogenOne has stated, it seems likely that this will lead to a NAV write up for the projects and maybe HH2E as well. However, the real boost will be the validation that this gives to these investments, which hopefully will help improve investors’ confidence in the hydrogen story.]
HGEN : HydrogenOne announces HH2E restructuring