HydrogenOne Capital Growth (HGEN) provided a Q1 2024 NAV and portfolio update. The company’s NAV per share grew 0.6% from 31 December 2023, and is up 3.6% since 31 March 2023.
Notable developments for the quarter included:
- Continued revenue growth from private portfolio companies, delivering an aggregate £81 million in total revenue in the 12 months to 31 March 2024, an increase of 103% compared to the 12 months to 31 March 2023;
- Sunfire announced a successful equity funding round, part of a wider funding package totalling more than €500m;
- The Baker Hughes investment in Elcogen marked the close of a €140 million funding round, underpinning the construction of a new plant in Estonia, leading to a 6% increase in carrying value;
- At HH2E, ahead of an upcoming external funding round, corporate consolidation was undertaken and a new green hydrogen project was also added to the company, with the carrying value increasing by 32%;
- HiiROC, a global technology leader in patented Thermal Plasma Electrolysis (TPE), received a strategic investment to accelerate its expansion and sales into the US, with the carrying value increasing by 49%; and
- Cash position of £4.1 million as at 31 March 2024, and £0.4m of listed hydrogen companies.
The full release is outlined in full below.
The quarterly NAV increase was driven primarily by valuation uplifts to the company’s portfolio of private investments, positively contributing 2.10 pence (2.1%) per share to the NAV movement. The increase in NAV was underpinned by increases in multiple holdings including HiiROC, HH2E and Elcogen, partly offset by NAV decreases in Swift Hydrogen, Strohm and Gen2 Energy. The NAV update includes a number of movements as a result of external price benchmarks and pricing in follow on investment rounds. New equity investments in Elcogen, Sunfire and HiiROC all validate the company’s carrying values of these portfolio company investments.
Private valuations at the end of the quarter followed International Private Equity and Venture Capital Valuation guidelines. The portfolio weighted average discount rate at 31 March 2024 was 14.3%, higher than 31 December 2023 (14.2%), decreasing NAV by 1.2 pence per share. The portfolio weighted average discount rate at 31 March 2023, by contrast, was 12.8%, with higher discount rates reducing 31 March 2024 NAV by 8.0 pence per share.
During the 12 months to 31 March 2024, private portfolio companies delivered an aggregate unaudited £81m in revenue, a 103% increase compared to the 12 months ending 31 March 2023, on a pro-forma basis. These positive financial trends reflect the build out of capacity to meet strong order books for hydrogen supply chain equipment.
The company’s investments have resulted in 91,116 tonnes CO2e of avoided greenhouse gas emissions in FY2023, some 325 times higher than company scope 1, and 3 emissions. Full details of this were published recently in HydrogenOne’s first Sustainability Report, which can be found on the company’s website.
As announced in February, the company has implemented a restructuring of NanoSUN, and re-launched the streamlined business, renamed as Swift Hydrogen Ltd. The company now wholly owns Swift, up from 23%, which is being held at nominal value pending further corporate developments.
Investments in the quarter totalled £1.4 million, comprising a number of follow-ons in existing portfolio companies. Cash and cash equivalents were £4.1 million, with an additional £0.4 million of listed hydrogen companies at the end of the quarter. The ompany has recently delivered a number of transactions that underscore and add to the carrying values of portfolio companies, as part of a strategy of co-investing with strategic investors and global corporations.
Sunfire completed a Series E financing round totalling over €500m, including €215m in equity capital, approximately €200m in grant funding and up to €100m provided by the European Investment Bank. Sunfire’s revenues have expanded ten-fold since the company’s initial investment in 2021, and we continue to anticipate a robust growth trajectory. The company has exercised its rights to make a follow-on investment in Sunfire as part this funding round, which mitigates the potential impact of dilution by leaving the company’s stake in Sunfire unchanged.
As announced in April, Baker Hughes made a strategic investment in Elcogen, following investment from HD Hyundai in 2023, part of a €140 million fundraise overall. This supports the go-ahead of the Elco-1 plant project in Estonia, and has resulted in a 16% increase in carrying value (£25.9 million) since 30 September 2023.
A new strategic investor recently invested into HiiROC, and combined with further investment from Cemex in 2023, and orders for equipment, has resulted in an increase of 49% in the Company’s carrying value (£20.4 million) at 31 March 2024.
The company implemented a corporate restructuring of HH2E, alongside Foresight Group, subject to customary closing, ahead of planned material third party fund raising for HH2E green hydrogen projects in Germany. The Company has exchanged its development rights for five project SPVs, including the Thierbach SPV, for equity in HH2E. In parallel, the Lubmin SPV, which was previously carved out of the Company’s direct holdings, has also been combined with HH2E in a non-cash transaction for the Company. The 31 March 2024 NAV for HH2E reflects this transaction, by combining previous holdings in Thierbach with HH2E, with a 32% accretion (£2.9 million) in value of the combined position.
At 31 March 2024, the company has invested in multiple private investments, in the UK and Europe, representing 99.7% of its invested portfolio by value. Additional investment in strategic, global hydrogen equities represented 0.3% of the invested portfolio. The Company continues to exit from its listed holdings, and to focus on private investments.
HGEN : HydrogenOne Capital Growth continues to see strong portfolio growth