Hydrogen Brings New Hope to an Old Industry Titan

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Thyssenkrupp is planning a minority IPO of the electrolyzer business that could be repurposed to potentially serve the production of wonder fuels

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ThyssenKrupp last year announced plans to list a minority stake in the business. The math is compelling, based on high valuations of stand-alone hydrogen electrolyzer businesses such as ITM Power and NEL,

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Analysts estimate that Nucera will be worth between €4 billion and €5 billion (or $4.6 billion and $5.7 billion) at the same multiples. Thyssenkrupp, which is slowly tearing itself apart in 2020 following the sale of its flagship elevator business and a protracted identity crisis, now has a market value of less than $8 billion.

The company expects to raise up to €600 million through an initial public offering. The funds will be used to increase capacity five-fold, develop technology and underwrite larger projects. Nucera will be different from other green-hydrogen stocks in that the technology is proven and industrial capability already exists.

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The partnership with industrial-gas giant Air Products has helped build a €900 million pipeline. Nucera has a contract with fertilizer manufacturer CF Industries for a 20-MW electrolyzer in Louisiana by 2023. Final investment decisions still required for its other big projects: Shell‘s

A 200-MW electrolyzer in the port of Rotterdam and a more than two-GW facility in its new Saudi city of Neom. Several other green-hydrogen projects are also on hold.

Nucera’s existing chlorine business generated €319 million in revenue and €30 million in earnings last year and has some growth potential. But most investors will be more attracted by the hydrogen plan, which management expects to break even in the year by September 2024 and generate revenue of €600 million to €700 million in the next fiscal year. The gas’s ability to clean hard-to-decarbonize areas such as steel and long-distance transportation undercut expectations of a seven-fold growth in the global market by 2050.

For investors in an upcoming IPO, perhaps the major risk is that rival technology becomes a leader in a rapidly growing industry. Nucera is managing this by committing significant research and development resources to improving its technology over the next four to five years. There is also a problem that minority-listed businesses trade at a stock-market discount because they have small free floats and are not truly independent.

The good news is that there’s little noticeable hydrogen hype in Thyssenkrupp’s stock, which jumped last year to fall back on IPO news. Shareholders cannot expect Nucera’s full value to flow through to its parent company’s valuation; Yet the listing process is still likely to cast a new shine on an old industrial giant.

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