Energy firm enters into multimillion-pound joint venture

Sheffield-based clean fuel company ITM Power has entered into a 50/50 joint venture with Linde AG Group to deliver hydrogen to large-scale industrial projects.

ITM intends to raise at least £52m before expenses through a strategic investment of £38m at 40p per share by Linde UK Holdings No 2 Limited – which is a member of the Linde AG Group – and through a conditional placing of £14m at 40p per share with certain existing and new institutional investors.

The Group also intends to raise up to £6.8m through an Open Offer of 17,053,126 New Ordinary Shares at 40p per share.

The proceeds of the fundraising will mainly be used to enhance the Group’s manufacturing capabilities, particularly for the development and production of large scale 5MW electrolysers, to fund its initial financial contribution to the joint venture, and provide working capital and balance sheet strength to support the delivery of the contract backlog and opportunity pipeline.

Linde will appoint a non-executive director to ITM’s board following completion of the share subscription.

The Linde Group is an engineering company and a major supplier of industrial, process and speciality gases. ITM is a listed energy storage and clean fuel company, which specialises in hydrogen energy solutions.

Graham Cooley, Chief Executive Officer of ITM, said: “The major strategic investment from Linde cements a five-year relationship between us and provides ITM Power with a world- leading partner that brings deep expertise in engineering, procurement and construction and a global customer base.

“The joint venture will enable us to focus on our core competency of the development and sale of electrolysers, and with Linde as our partner to deliver green hydrogen at scale. The successful fundraising provides the financial resources to exploit this exciting opportunity to the full.

“We are seeing increasing global demand for hydrogen as a solution to renewable energy storage needs and the decarbonisation of major industrial processes.

“The fundraising and our partnership with Linde will help us to meet this demand on a growing scale, deliver efficiencies throughout our supply chain and represents a significant step on our pathway to medium-term profitability”

ITM has also announced its final results for the year ended 30 April 2019.

The company’s total revenue and grant funding of £17.5m (2018: £14.1m) was up 25%. Loss from operations of £9.3m (2018: £6.5m) saw an increase of 44%, while EBITDA loss of £7.5m (2018: £4.8m) increased 56% as the Group invests to scale up its facilities, resources and production capacity.

Cooley said: “ITM Power continues to deliver strong growth with revenues up 25% year on year. The Group has benefited from the lessons learned in deploying units above 1MW for the first time, including in harsh environments and difficult operating conditions.

“This delivers significant competitive advantage for future deployments as we scale up and standardise our products. We’ve also been learning how to maximise value from our growing portfolio of revenue generating assets in the shape of the first real hydrogen refuelling network in the UK.”

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