HH2E collapse hurts HydrogenOne and Foresight Environmental

Shares in Foresight Environmental Infrastructure (FGEN ) and HydrogenOne Capital Growth (HGEN ) have tumbled to all-time lows after HH2E, a German green hydrogen developer that both funds back, announced a fall into administration after failing to find financing. 

Hydrogen Capital Growth crashed 20%, or 7.8p, to 30p after writing off an £11m investment in HH2E that accounted for 8% of net assets. 

This leaves the shares at a 67% discount to net asset value (NAV) with a market value of just £48m. Two days ago the company reduced its NAV per share by 2.7% to 100.8p, but made no reference to the problems at HH2E.

HGEN also provided a £1m loan to HH2E and today said that under German insolvency law, shareholder debts are subordinated to other creditors.

Foresight Environmental slid 4.5%, or 3.8p, to 81p after warning it would not recover £19.3m of investment in HH2E, which was equal to 2.6% of its multi-technology portfolio.

The £555m investment company is an indirect creditor of HH2E via the Foresight Hydrogen HoldCo established to make loans to the business which had failed to source funding within the required time scale for construction of its plant in the coastal resort of Lubmin.

HGEN fund managers Dr JJ Traynor and Richard Hulf said the company’s demise reflected the ‘challenging current global funding environment’.

The board of the Foresight fund, which is managed by Chris Tanner and was formerly called JLEN Environmental Assets, said it had decided it was not appropriate to provide further finance to HH2E.

It said HH2E was the only early-stage asset in its portfolio and reasserted that it expected to cover its 7.8p full-year dividend 1.2-1.3 times.

Panmure Liberum’s Shonil Chande said the insolvency was an unfortunate reflection of a shift in sentiment within the green hydrogen market due to regulatory and demand challenges.

‘On a NAV basis and given its focus on the sector, this is a bigger setback for HGEN. It is a setback to FGEN too as green hydrogen has previously been seen as an investment focus area. HH2E offered a platform to expand in what has probably been seen as the most attractive green hydrogen market in the EU,’ he said.

Stifel said it was a ‘very disappointing outcome’ and reduced its NAV estimate per share to 106-109p, with HH2E accounting for 3p of the decline from 113p at 30 June. This leaves the shares on a discount of around 25%.