HydrogenOne Capital Growth (HGEN) has released a quarterly NAV and portfolio update.
Key highlights for the quarter include:
Q2 2024 Key Highlights
- Net Asset Value per share of the company increased by 2.9% since 30 June 2023;
- Private portfolio companies delivered an aggregate £76m in total revenue in the 12 months to 30 June 2024, an increase of 44% compared to the 12 months to 30 June 2023;
- Portfolio companies continue to attract fresh capital from strategic investors, with over £140m of investment completed during the quarter, underscoring the attractiveness of clean hydrogen and the company’s growth strategy within the sector;
- Elcogen received a major investment from Baker Hughes marking the close of a €140m funding round, underpinning the construction of a new solid oxide plant in Estonia;
- HiiROC, a global technology leader in patented Thermal Plasma Electrolysis, received a strategic investment to accelerate its expansion into the US, with the carrying value increasing by 13%;
- HH2E completed a corporate consolidation, ahead of an expected external funding round, and added a new green hydrogen project Lubmin, in Germany, to the company’s portfolio by combination with its holding in HH2E;
- Strohm, a leading company in low carbon pipelines, completed a €30m funding round, led by new and existing investors; and
- Cash position of £1.7m as at 30 June 2024, and £0.3m of listed hydrogen companies.
Investment advisor commentary:
The key contributors to the quarterly NAV were valuation uplifts in multiple private holdings including HiiROC, HH2E, and Bramble, partly offset by decreases in the valuation of Cranfield Aerospace, Gen2 Energy, and Strohm, adding 1.17 pence (1.1%) per share to the NAV.
The portfolio weighted average discount rate at 30 June 2024 was 13.3%, lower than 31 March 2024 (14.3%), as a result of a decrease in the small company premiums, increasing NAV by 2.86 pence per share. The portfolio weighted average discount rate at 30 June 2023 was 13.7%, higher than 31 March 2024, increasing 30 June 2024 NAV by 2.05 pence per share.
During the 12 months to 30 June 2024, private portfolio companies delivered an aggregate unaudited £76 million in revenue, an increase of 44% compared to the 12 months to 30 June 2023, and a slight reduction compared to the prior quarter. Revenue growth reflects the build-out of capacity to meet strong order books for hydrogen supply chain equipment.
Meanwhile, portfolio companies continue to attract substantial fresh capital from strategic investors, with over £140 million investment completed in the quarter. This underscores the company’s growth strategy of investing in distinctive clean hydrogen growth technologies alongside industrial companies and specialist investors.
Investments in the quarter totaled £1.2 million in follow-ons in portfolio companies, including Strohm and Cranfield Aerospace. Cash and cash equivalents were £1.7 million, with an additional £0.3 million of listed hydrogen companies at the end of the quarter.
A new strategic investor invested in HiiROC, and combined with further investment from Cemex in 2023 and orders for equipment, has resulted in an increase of 13% in the company’s carrying value (£23.0 million) at 30 June 2024, compared to 31 March 2024, and a 68% increase compared to 31 December 2023.
A corporate consolidation of HH2E was completed in Q2 2024. 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 30 June 2024 NAV for HH2E reflects this transaction, by combining previous holdings in Thierbach with HH2E, with a 38% accretion (£3.4 million) in value of the combined position compared to 31 December 2023.
Baker Hughes made a strategic investment in Elcogen, following investment from HD Hyundai in 2023, part of a €140 million total fundraise. This supports the go-ahead of the Elco-1 plant project in Estonia and has resulted in a 22% increase in carrying value (£26.2 million) since 30 June 2023.
Strohm closed a €30 million funding round, led by new and existing investors, including €1.2 million from HydrogenOne through convertibles. The new investment provides funding for further capacity expansion at Strohm’s Netherlands plant, which underpins the company’s confidence in the medium-term growth outlook, despite near-term delays in revenue delivery.
At 30 June 2024, the company has invested in a portfolio of private investments in the UK and Europe, representing 99.8% of its invested portfolio by value. Additional investment in strategic, global hydrogen equities represented 0.2% of the invested portfolio. The company continues to exit from its listed holdings and focus on private investments.
The portfolio continues to perform in line with the expectations of the Investment Adviser, HydrogenOne Capital LLP.
HGEN: HydrogenOne continues to make solid progress despite discount
