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TWO NEW PE FUNDS HERALD GREATER INSTITUTIONAL INVESTOR INTEREST IN THE HYDROGEN SECTOR 

Justin Milberg's picture
Managing Member, KV Catalyst IM LLC

Justin Milberg is an analyst and currently serves as a Managing Member of KV Catalyst IM LLC with a focus on the hydrogen economy.  Previously, he served as a Managing Director at Resource...

  • Member since 2022
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  • Dec 14, 2022
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In September, the IEA published its 2022 Global Hydrogen Review and highlighted the “accelerated flow of capital to certain key hydrogen technologies, via project investment and equity in companies for scale up. The enhanced pace is fueled by several converging factors including recognition that the energy transition to net zero emissions is quickening, and that the role of hydrogen to meet this target is expanding, in part due to advances in technology.” Increasingly, institutional investors are following governments and corporates in allocating capital to the hydrogen sector including through two multi-billion euro private equity funds that closed in Q3:

CI Energy Transition Fund I (EUR3bn)
On August 31st, Copenhagen Infrastructure Partners (CIP) launched its first hydrogen specific infrastructure fund with a particular focus on industrial applications such as fertilizer, steel and efuels (so called Power-to-X or PtX projects).  Consistent with other CIP funds, CI ETF I will target greenfield projects that will de-risk through long term offtake agreements. The fund comprises more than 65 institutional investors including pension funds, life insurance companies, sovereign wealth funds, asset managers and family offices.  As of September, the Energy Transition Fund reported having PtX projects underway for Ammonia and Sustainable Aviation Fuel in Morocco, Portugal, Northern Europe and Australia.   

HY24 Clean H2 Infra Fund (EUR2bn)
HY24 is a joint venture between FiveT (a Swiss manager of funds across three tech verticals) and Ardian (a European private markets manager across asset classes). On October 10th, HY24 launched the Clean H2 Infra Fund will invest across the hydrogen value chain ranging from production to end users. The fund comprises more than 50 corporate and financial investors from 13 countries. Corporate investors include Air Liquide, TotalEnergies, Plug Power, Chart Industries, Baker Hughes, LOTTE Chemical, Airbus, and Snam. Financial investors include AXA, Credit Agricole Assurances, Nuveen, Groupama, Societe Generale and BBVA. Initial deployments include investments in H2 MOBILITY (fueling stations), Hy2Gen (production), Enagas Renovable (production).

These hydrogen specific funds are complemented by a wide range of more diversified private equity and infrastructure funds that are making allocations to the hydrogen sector. A recent example includes the EUR190 million Series B financing for H2 Green Steel led by pension and sovereign wealth capital. On an even larger scale, infrastructure investor Ares Management announced in February that it would work with several partners to develop a gigawatt scale clean hydrogen project in Corpus Christi, TX.  The potential for an accelerated pace of hydrogen offtake agreements in the US under the provisions of Inflation Reduction Act should serve to further increase allocations from institutional investors.

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