Hydrogen IPO finds rare pocket of market optimism
06/06/2022 10:42
(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
By Lisa Jucca
MILAN, June 6 (Reuters Breakingviews) - Industrie De Nora is
braving choppy stock markets by targeting a rare investor sweet
spot. The family-controlled Italian group is betting on hype
surrounding carbon-free hydrogen to clinch a Milan listing in
June.
It’s been a terrible year for initial public offerings.
Russia’s invasion of Ukraine and concerns
about runaway inflation have deterred companies from listing on
public markets. The total sum raised in IPOs globally shrunk by
71% to $81 billion in the first five months of 2022 https://www.ft.com/content/bc96ce22-8065-4be7-b577-5ba9ba225568,
according to Dealogic. Formerly high-flying technology stocks
have slumped; even giants like Amazon.com AMZN.O and Facebook
parent Meta Platforms FB.O have underperformed the S&P
500 Index, which is down around 14% this year.
De Nora is attempting to buck the gloomy trend by targeting
one of the few remaining pockets of market optimism. The
company, which has been making electrodes for chemical processes
since it was founded in 1923, has been using its expertise in
splitting water into hydrogen and oxygen – a process known as
electrolysis – to tap into growing enthusiasm about the process
in helping the transition from fossil fuels. It’s a
supplier to Thyssenkrupp’s TKAG.DE hydrogen unit Nucera in a
giant Saudi hydrogen project, and holds a 34% stake in that
business.
Green hydrogen, formed by powering electrodes with renewable
energy, accounted for just 1% of the gas produced globally in
2020. But it’s a key plank of Europe’s drive to diversify away
from fossil fuels. In its REPowerEU strategy https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2022%3A230%3AFIN&qid=1653033742483,
published last month, the European Commission said the bloc
should produce 10 million tonnes and import 10 million tonnes of
the green fuel by 2030.
Hydrogen components are the smallest but most valuable part
of De Nora’s business. Assume the
company generates total revenue of around 800 million euros this
year, roughly in line with last year’s growth rate, and makes
10% of it from the hydrogen business. If valued at the same 15
times multiple of future sales as Norwegian rival Nel NEL.OL ,
the components unit would be worth 1.2 billion euros. Meanwhile
De Nora’s water treatment and traditional electrodes business
would together be worth just over 2 billion euros if valued like
peers Evoqua AQUA.N and Permascand
PSCAND.ST , respectively. Throw in the Nucera stake, which may
be worth 1.3 billion euros, and De Nora’s mooted valuation of
nearly 5 billion euros is within reach. The green hydrogen wave
could inflate a rare pocket of market optimism.
Follow @LJucca https://twitter.com/LJucca on Twitter
CONTEXT NEWS
Industrie De Nora, which makes components to produce green
hydrogen, said on June 6 it plans to list in Milan by the end of
June 2022, one of the few new stock market listings in Europe
since the start of the year.
The Italian company, which also has a water treatment
division, reported revenue of 616 million euros in 2021 and an
EBITDA of 127 million euros.
The group is 64%-controlled by the De Nora family. Italian
gas network operator Snam has a 34% stake.
(Editing by Peter Thal Larsen, Streisand Neto and Oliver
Taslic)
((For previous columns by the author, Reuters customers can
click on JUCCA/
SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe
| lisa.jucca@thomsonreuters.com ;
Reuters Messaging: lisa.jucca.thomsonreuters.com@reuters.net))