Momentum building despite discount

While shares of HydrogenOne Capital Growth (HGEN) have continued to fall, investors should be buoyed by the ongoing growth of the portfolio and the accelerating development of the green hydrogen sector.

Despite challenging macro-economic conditions, HGEN’s NAV grew 5.8% over 2023, while the portfolio generated aggregate revenue growth of 125%. This momentum reflects the rapidly accelerating demand for green hydrogen products and services, with many of HGEN’s companies investing heavily to increase productive capacity to cope with growing backlogs. Industry dynamics also remain supportive as investment flows into the sector while government funding programmes provide further support.

Given the growing confidence of those within the sector and the ongoing fundamental performance of its companies, it is difficult to see how such a wide discount has opened up. We believe this is more a symptom of negative market sentiment, and as economic conditions steadily improve it is possible that we will see a significant re-rating of HGEN’s shares.

Diversified green hydrogen exposureHGEN aims to deliver an attractive level of capital growth by investing, directly or indirectly, in a diversified portfolio of hydrogen and complementary hydrogen-focused assets.

Period ended Share price total return (%) NAV total return (%) Benchmark2 total return (%) MSCI ACWI total return (%)
31/03/20221 8.8 (3.2) (14.7) 4.5
31/03/2023 (56.6) 5.4 (27.0) (1.4)
31/03/2024 (4.0) 3.0 (9.4) 20.6

Source: Morningstar, Marten & Co. Note 1) period from launch on 30 July 2021. 2) Benchmark is Solactive Hydrogen Economy Index.

Domicile England & Wales
Inception date 30 July 2021
Manager JJ Traynor Richard Hulf
Market cap 57.07m
Shares outstanding (exc. treasury shares) 128.82m
Daily vol. (1-yr. avg.) 184,819 shares
Net gearing Nil

Share price and premium/(discount)Time period 30/07/2021 to 23/04/2024

Source: Morningstar, Marten & Co

Performance since launchTime period 30/07/2021 to 31/03/2024

Source: Morningstar, Marten & Co

Annual results and market backdrop

Our initiation note – funding a green revolution – describes HGEN’s investment approach and the fundamentals of the green hydrogen sector

On 18 April 2024, HGEN published its annual results for the year ended 31 December 2023. Over the 12-month period, the company’s NAV increased by 5.8% to £132.7m thanks to the strong performance of its portfolio companies. Despite the positive returns the share price fell 37%, widening the discount to 52%.

While not reflected in the share price, the outlook for the company continues to improve as the adoption of green hydrogen accelerates, supported by investment from some of the world’s largest companies. In 2023, some $17bn flowed into green hydrogen projects, a 400% year on year increase, highlighting the nascent value of the sector. Several of HGEN’s investments also saw significant developments over the course of the year, which we discuss in detail on page 5. This included progress on HH2E’s Lubmin project which, if approved, would mark a significant milestone for green hydrogen production in Europe.

Figure 1:Contributions to change in NAV over 12 months to 31 December 2023 (pence per share)Source: HGEN, Marten & Co.

As we covered in detail in our initiation note, the opportunity for industrial-scale green hydrogen is vast with estimates suggesting a third of all greenhouse gas (GHG) emissions today could be addressed by the technology.

Accelerating industry dynamics are reflected in the performance of HGEN’s portfolio, with aggregate revenue up 125% from the year prior. In many cases, this is a result of these companies converting developing technologies into orders from customers, with investment flowing into productive capacity to match growing order books.

As has been well documented, investors have remained wary of more growth orientated companies due to the challenges created by stubbornly high inflation and interest rates, in addition to the wider negative sentiment surrounding the UK economy. That is reflected in the increase in the discount rate used to value HGEN’s portfolio. Promisingly, however, there have been signs of improvement, with inflation in particular falling dramatically from the average levels seen over 2023.

While uncertain macro-economic conditions continue to be a challenge, the potential upside for the sector remains one of the highest in the investment trust universe. Thanks to its diverse portfolio invested across the green hydrogen supply chain, HGEN provides an excellent platform to invest in this fast-growing sector, with the opportunity made even more attractive given current discounts.

Asset allocation

As of 31 December 2023, HGEN had deployed the majority of its available capital, with 95% of the portfolio invested in private assets, 2% in listed assets and 3% in cash. This is a significant shift in its position from 12 months ago where almost 15% of the portfolio was still held in cash.

The investment activity over the year focused predominantly on strategic follow-on investments alongside both existing and new investors such as Cemex, HD Hyundai, and Baker Hughes. There was one new investment made earlier the year, the Thierbach project in Germany.

In total, £10.6m of investments were made, which we discuss in the portfolio developments section on page 6.

While frustratingly, HGEN’s discount has limited the ability for the company to raise new capital, the investment adviser remains happy with the state of the existing portfolio. In addition, the team has identified exit opportunities for a number of private portfolio companies, some of which have already engaged with the market. The adviser remains confident that these companies can achieve targeted exit multiples. We expect this would further validate HGEN’s NAV and could provide a catalyst for a significant re-rating of the company’s shares. Any exits will also provide additional capital for the ongoing development of the portfolio.

Country Sector Value as at 31/12/23 (£m’s) Amount invested in 2023(£m’s) Revalue from 31/12/22 (£m’s) % of NAV as at 31/12/23(%) % of NAV as at 31/12/22(%)
Sunfire Germany Electrolyser producer 27.1 1.8 3.5 20.4 20
Elcogen United Kingdom Solid oxide fuel cells 24.4 4.0 18,4 19
Strohm Netherlands Thermoplastic composite pipe 19.7 0.5 7.6 14.9 11
HiiROC United Kingdom Clean hydrogen technology 13.7 0.8 10.3 12
Bramble Energy United Kingdom PCB fuel cells 10.6 0.6 8.0 9
Cranfield Aerospace Solutions United Kingdom Hydrogen powered aircraft 11.9 3.5 2.1 8.9 7
NanoSUN1 United Kingdom Mobile hydrogen storage and refuelling 5.4 2.5 (8.6) 4.1 11
HH2E AG Germany Green hydrogen producer 7.0 1.8 5.3 5
Gen2 Energy Norway Green hydrogen producer 4.4 0.4 0.6 3.3 3
HH2E Thierbach phase 1 Germany Green hydrogen project 1.9 1.9 0 1.5
Portfolio valuation 128.5 10.6 12.4 96.8 81.7
Cash and cash equivalents 4.8
Other net assets (0.6)
Total 132.7 100

Figure 3:HGEN portfolio by theme as at 31 December 2023

Source: HGEN

Figure 4:HGEN portfolio split by geography as at 31 December 2023

Source: HGEN

Major portfolio developments


Sunfire has seen 10x revenue growth since HGEN’s initial investment

Industry-leading electrolyser manufacturer, Sunfire, remains HGEN’s largest investment and continues to go from strength to strength, delivering a number of key milestones over the past year. Notably, Sunfire has seen impressive revenue growth from a growing global customer base, with this increasing over 10x since HGEN’s initial investment back in October 2021.

The company received a significant boost in August following a purchase order for a 100 MW pressurised alkaline electrolyser. This supply agreement, with a leading European refinery, marks a key milestone, supplying one of the world’s largest electrolyser systems.

This announcement followed the launch of the company’s new production facility in Solingen, Germany earlier in the year as Sunfire seeks to keep up with the growing demand for its products. The expansion of this facility has helped increase the company’s total capacity to 500MW of alkaline electrolysis with plans to expand this to 1GW in due course.

Both the increasing scale and demand for electrolysers reflects the fast-moving dynamics of the green-hydrogen industry, which we discussed in detail in our initiation note and which you can find here. Recognising the opportunity, HGEN invested a further £1.8m early in 2023, highlighting the manager’s confidence in its largest position.

Sunfire has secured a €500m funding package

Crucially, Sunfire continues to receive additional funding to drive forward development, receiving €169m under the EU IPCEI scheme, to establish the first industrial series production of its solid oxide and pressurised alkaline electrolysis technologies. The company’s capital position was supported further by an announcement in March 2024 of an equity funding round which was part of a wider funding package totalling more than Є500m. The success of this round underscores both HGEN’s strategy of backing the leading innovators in the hydrogen industry, and its current valuation of Sunfire. As part of the funding round, HGEN exercised its rights to make a follow-on investment of £0.3m which mitigates the potential impact of dilution, leaving the company’s stake in Sunfire unchanged.


Elcogen has external funding for its new plant in Estonia

Elcogen is another of HGEN’s major electrolyser investments. It continues to benefit from its track record and established position with over 60 industrial customers worldwide. The company’s existing footprint and potential for scalability has helped attract ongoing strategic investment. This includes Korea Shipbuilding & Offshore Engineering, a member of HD Hyundai Group, which invested €45m in Q4 2023, and Baker Hughes who in April 2024 announced a strategic investment as part of an overall funding package totalling €140m. The money will be used to scale up the company’s leading solid oxide cell technology, and help fund a new factory facility in Tallinn, Estonia, where preparations for construction have now commenced. Initially, the facility will have capacity of 100MW, but the plan envisages capacity of 360MW in time.

In addition to these investments, Elcogen intends to collaborate on green hydrogen production solutions with the two companies going forward. For HD Hyundai, the focus will be on marine propulsion systems and stationary power generation, with the intent to manufacture products in South Korea.

Other significant developments during the year included a supply and R&D collaboration agreement with the French company Genvia. It was also awarded funding from IPCEI for a €25.4m project to accelerate the deployment of its solid oxide technology.


Tripling of capacity at Strohm’s Dutch plant

HGEN’s third largest holding, Dutch-based pipeline company Strohm, was one of the main drivers of HGEN’s NAV improvement over 2023. The company continues to execute its growth strategy, responding to rapidly accelerating demand and a record order book by tripling the capacity of its Dutch plant to 140km/year.

Strohm’s clients feature multi nationals ExxonMobil, TotalEnergies, and PRIO with projects including natural gas pipeline installations off the coast of Brazil and Congo and a more recently announced development in Guyana which was the largest contract ever secured by Strohm. The Guyana project was also a technological success with Strohm successfully installing its first deep-water / high pressure TCP jumper at water depths of 1,700m, opening up the possibility of a range of potential markets.

These deals reflect the value of its unique, Thermoplastic composite pipe technology (see our initiation note for more details) which can be used across conventional energy, as well as renewable applications, greatly reducing the associated technology risk.

Strohm achieved profitability ahead of schedule

Notably, the company has achieved profitability ahead of schedule, converting exceptional year on year revenue growth of 200% into positive EBITDA in Q4 2023. It also continues to benefit from strong regulatory tailwinds, having been selected as a partner for the Hydrogen Offshore Production for Europe project and OFFSET project.

The company’s ongoing execution saw HGEN invest a further £0.5m in November 2023.

Cranfield Aerospace

The £3.5m follow-on investment in UK-based passenger flight innovator, Cranfield Aerospace, was the largest made by HGEN in 2023. This was done alongside Safran Corporate Ventures and the Strategic Development Fund, with the fresh capital injection reflecting the de-risking of its hydrogen-electric turbo-prop technology and the introduction of the Dronamics platform, the world’s first cargo drone airline using hydrogen fuel cell propulsion.

De-risking hydrogen-powered turboprop passenger flight and introduction of cargo drones

During the year, the company also unveiled its newly refurbished hangar and R&D facility while announcing a change in its strategic direction. This related to a previously announced plan for a merger with Britten-Norman (discussed in our last note, which you can read here). This has been updated, with the intention now to further strengthen the strategic co-operation between these two separate parties.

Swift Hydrogen

Post period end, in Feburary 2024, NanoSUN was relaunched as Swift Hydrogen to support a lower cost base and simplified capital structure. It received £2.5m of follow-on funding from HGEN in 2023, reflecting the ongoing development of its hydrogen distribution and mobile refuelling equipment. Swift Hydrogen continues to generate the fastest top-line growth of HGEN’s investments, expanding revenue by over 90x since December 2021.

HH2E & Thierbach investments

HGEN invested in HH2E (the German developer of hydrogen production plants) in May 2022 and provided £1.9m of finance to the HH2E Thierbach project in 2023.

Post period end, HGEN agreed to a restructuring of HH2E in order to streamline its business ahead of its planned third-party fundraising efforts. As a result, HGEN has essentially swapped stakes in project SPVs for topco equity. While its equity share stays at 11%, HGEN now has direct exposure to the Lubmin project which is designed for an initial input capacity of 100 MW, producing 7,000 tonnes per annum of REDII-compliant green hydrogen from 2026. It is expected to be the first FID out of the block for HH2E with the value impact for HGEN expected to come following the financial close of the project within the next 12 months.

HGEN now has exposure to HH2E’s Lubmin project

On completion, this would mark a significant milestone for HGEN and increase green hydrogen’s technological footprint in Europe.

The development of these projects, which are supported by institutional investors such as DHL Group and Sasol, continues to provide validation to HGEN’s investment thesis. There remains significant growth potential for these assets and HH2E continues to secure contracts covering power procurement, hydrogen distribution, and offtake arrangements, alongside forming strategic alliances with notable entities such as 50hertz, Gascade, DHL, and H2 Mobility.


As noted, despite generating solid NAV growth over the course of the year, HGEN’s share price has continued to struggle. This reflects the challenges faced by both the renewable energy sector and its immediate listed green hydrogen peers. While this remains frustrating, solid NAV growth and the fundamental momentum of the sector are increasingly reassuring.

We believe this should eventually support a significant re-rating of the company’s shares, particularly if we see ongoing improvements in economic conditions. Supporting this view is the portfolio’s current revenue multiple of 9.8x. When taken together with accelerating revenue growth of over 100%, this appears very reasonable, particularly when considering the potential scalability of many of the company’s assets.

3 months(%) 6 months(%) 1 year(%) Since launch(%)
HGEN share price (8.7) (18.0) (4.0) (54.7)
HGEN NAV 0.0 2.3 3.0 5.1
Solactive Hydrogen Economy Index (1.5) 6.0 (9.4) (43.5)
MSCI ACWI 9.2 16.1 20.6 24.2


Over the 12 months ended 31 December 2023, HGEN’s shares traded on an average discount of -41.5%, moving within a range of -17.6% to -58.1%. As of publishing, this stood at 57%.

As noted, we don’t believe this is a fair reflection of the underlying quality of the company’s assets, or the overall health of the green hydrogen sector. Promisingly, the share price can respond rapidly to changes in sentiment, as we saw in May last year, shown in Figure 6.

Figure 6:HGEN premium/(discount) since launch

Source: Morningstar, Marten & Co


HGEN is an Article 9 fund, the most sustainable classification under EU SFDR, with 92% of its portfolio aligned with EU taxonomy. In 2023, the company produced its first standalone sustainability report aligned with the IFRS International Sustainability Standards Board as an early adopter. This showed that as a result of its activities, 91,116 tonnes of CO2e greenhouse gas emissions were avoided over FY 2023 and 141,695tCO2e have been avoided since IPO.

Fund profile

More information is available on the trust’s

HGEN is the first London-listed fund investing in clean hydrogen for a positive environmental impact. It aims to deliver an attractive level of capital growth by investing, directly or indirectly, in a diversified portfolio of hydrogen and complementary hydrogen-focused assets whilst integrating core ESG principles into its decision-making and ownership process.

HGEN compares its NAV performance to the Solactive Hydrogen Economy Index.

HGEN’s AIFM is FundRock Management Company (Guernsey) Limited (formerly Sanne Fund Management (Guernsey) Limited). It is advised by HydrogenOne Capital LLP, whose lead managers are JJ Traynor and Richard Hulf.

HGEN can hold both listed and unlisted (private) investments, however the majority of the portfolio is invested in unlisted hydrogen assets. In both cases, HGEN aims to be a long-term investor. The early portfolio was established with a liquidity reserve of cash and listed hydrogen assets, with the intention of giving investors exposure to the sector from day one.

HGEN holds its unlisted investments through a 100% stake in a limited partnership, HydrogenOne Capital Growth Investments (1) LP.

Previous publications

Readers interested in further information about HGEN may wish to read our previous note – Sky is the limit for HGEN – published on 3 May 2023, and our initiation note provided in Figure 7 below.

Richard Hulf, from Hydrogen One Capital, also appeared on our weekly news show on 16 February 2024. Click here to see the interview.

Title Note type Date
Funding a green revolution Initiation 3 May 2023
Sky is the limit for HGEN Update 17 October 2023
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