HydrogenOne Capital Growth (HGEN) has published its annual results for the year ended 31 December 2024, reporting solid operational progress across its portfolio but a marked fall in NAV and a hefty drop in share price amid sector-specific and macroeconomic challenges.
NAV fell by 12.2% over the year to £116.4m, or 90.39p per share, down from 102.99p at the end of 2023. The share price dropped by 56.4% to 21.65p, widening the discount to NAV to 76%, as investor sentiment towards early-stage, growth-focused investment trusts remained weak. Key detractors from NAV performance included the write-down of clean hydrogen developer HH2E and its associated Thierbach SPV, which entered self-administration in late 2024, along with the restructuring of NanoSUN into wholly owned Swift Hydrogen. These events accounted for a combined hit of 11.1p to NAV.
Despite these setbacks, HydrogenOne highlighted continued revenue growth within its private portfolio companies, which delivered aggregate revenues of £85m in 2024, a 14.9% increase year-on-year. Portfolio companies collectively raised around £500m during the year through equity, debt, and grants, providing valuation support in a challenging fundraising environment.
Investment activity in 2024 was focused on follow-ons, with £2.6m invested in four existing holdings. The company also exited its remaining listed hydrogen investments and sold its stake in Gen2 Energy for around £3m. Total invested capital since IPO now stands at £116.3m.
From an ESG perspective, the fund maintained its SFDR Article 9 classification and reported that over 132,800 tonnes of CO₂e emissions were avoided in 2024 alone (separately this morning, HGEN has published its 2024 sustainability report – click here to read more). Since IPO, cumulative avoided emissions have reached 274,534 tonnes, more than 576 times the company’s combined scope 1, 2, and 3 emissions.
Looking ahead, the board acknowledged the disappointment caused by the breakdown of its planned combination with Cordiant Capital in April 2025 but noted continued strong shareholder support for its hydrogen-focused strategy. The board is now evaluating alternative options to unlock value and improve share price performance, with an update expected at the June AGM.
The investment adviser remains positive on the longer-term hydrogen outlook. Despite recent project delays and policy uncertainty, global clean hydrogen investment reached £9bn in 2024, up 50% from the previous year. Green hydrogen production capacity is forecast to rise 15-fold by 2027, driven by over US$100bn of announced policy support.
[QD comment: HydrogenOne’s 2024 results capture the challenges of investing in a fast-emerging sector. Operationally, the portfolio continues to mature, with rising revenues, successful follow-ons, and a growing climate impact footprint. Yet the market remains unforgiving – especially towards early-stage and unlisted assets – with the share price now trading at a 76% discount to NAV.
The proposed tie up with Cordiant not coming to a fruition was a disappointment, and the high-profile write-down of HH2E hasn’t helped sentiment. That said, there’s a clear case that HydrogenOne’s wider portfolio has made tangible progress – and the fund’s long-term exposure to clean hydrogen remains a differentiated offer in the listed market, with clear long-term structural growth drivers.
While acknowledging the challenges, HGEN’s hefty discount looks significantly overdone and it is hard to see the level of value erosion the discount currently implies, given the portfolio’s potential. If the outlook improves – perhaps from some combination improving economic growth outlook, falling interest rates and successful project execution – we think HGEN’s share price has the potential to re-rate strongly.]
