Good morning, ladies and gentlemen, and welcome to the HydrogenOne Capital Growth Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged, they can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself, however, the company can review all questions submitted today and will publish our responses where it is appropriate to do so. And before we begin, we would just like to submit the following poll, which will just appear on your screens now. And I would now like to hand you over to Dr. JJ Traynor. JJ, good morning, sir.
Good morning. Thank you all for joining this webcast at such short notice. We've got some exciting and important news on HydrogenOne this morning. Very pleased to be joined by Richard Hulf, who's Managing Director of Cordiant HydrogenOne, and Benn Mikula, who's the CEO of Cordiant Capital. Welcome, everybody. The disclaimer statement. In summary, very pleased to announce this morning the combination of the investment advisor to HydrogenOne Capital Growth with Cordiant Capital, which creates a new force, a very powerful new force in clean hydrogen, which we're calling Cordiant HydrogenOne. As the hydrogen sector continues to show strong growth, we must increase our scale to remain competitive and to continue to add value for our shareholders.
By combining forces with the team at Cordiant, we expect there to be a wide range of benefits to the company and its shareholders, including an acceleration in market access and the enhanced capability and the enhanced efficiencies that come with a larger investment platform.
Just a reminder of HydrogenOne Capital, the investment advisor. We were established in 2020. We did the IPO in 2021. We raised GBP 130 million. The team's deployed the capital into multiple positions, companies, and projects. With the GBP 130 million AUM so far as at Q3 2024, that's 160,000 tons of avoided CO2. The investment advisor will transfer to Cordiant. HydrogenOne's transaction we're announcing this morning completes later on in the year. Cordiant Capital UK has agreed to purchase the company's investment advisor. Benn will take you through more details on Cordiant in a moment, but basically, Cordiant is a specialist global infrastructure and real assets manager with about USD 4 billion under management worldwide. Some investors will be familiar with Cordiant's digital infrastructure fund. Cordiant are familiar with the investment trust format.
The transaction is expected to result in an acceleration in HGEN's market access and capabilities compared to the standalone strategy that we were talking to you about before, and the current team from the investment advisor will become part of Cordiant and continue to provide asset management advisor services to HGEN. The completion is expected in early 2025, subject to customary regulatory approvals, and I'm pleased to introduce Benn Mikula now.
Thank you very much, Richard. And good morning, ladies and gentlemen. It's indeed a pleasure to be here today welcoming Richard, JJ, and the rest of their colleagues to the Cordiant team. And I'd like to take a little bit of time telling you about Cordiant and about why this will hopefully be an undertaking that serves to benefit you as shareholders of Cordiant HydrogenOne. Cordiant is a partner-owned firm. It is a sector specialist investor in infrastructure focused on what we call Infrastructure 2.0, which are the three sectors of infrastructure which are characterized by high growth, sustained growth over the next decade, by a requirement for specialist knowledge, in particular about some of the technology trends and where there is a societal demand for sustainability coming to bear.
These three sectors are the energy transition infrastructure or clean energy, digital infrastructure, and the agriculture value chain, three sectors of immense importance to the global economy. Across all three, we invest largely in the middle market, largely supporting the growth of promising companies, and we do so through sector specialist teams. As Richard mentioned, some of you may be familiar with Cordiant Digital Infrastructure Limited, an investment company listed on the LSE, which has a specialist team. We also have a specialist team in agriculture and a specialist team in energy transition infrastructure, which is what Richard, JJ, and the balance of the HydrogenOne team will be joining. Cordiant has, as was mentioned earlier, approximately $4 billion of assets under management.
That is in both investment trusts, investment companies, as well as in GP/LP funds, private capital funds serving pension plans and insurance companies in Europe, North America, and the United Kingdom. The structure of Cordiant is highly germane to what we're talking about today. That is that each specialist investment team is supported by the resources of the firm in terms of talking to investors in both the public and private capital worlds, ESG team, compliance, governance, and legal, top quality, back office, and indeed other resources. It's bringing a much more scaled-up platform to bear that can support the existing HydrogenOne team in further focusing on delivering shareholder value in this important market. I just note that over the past number of years, Cordiant has beaten its mandate returns in every strategy that has managed.
We pride ourselves as being not only focused on investors, but on delivering good returns for investors. If we can go to the next slide, please. I'd like to specifically focus on what this means for you as investors in HydrogenOne. There's a lot on this slide, which I could talk for, but I think it might be most germane to talk about some of the things that are important for you in the context of the London-listed entity. I think the most important thing is that we can offer enhanced access to capital, enhanced access to capital that can partner with the HydrogenOne portfolio, delivering future returns for investors by making additional investments. One of the themes that I think is worth mentioning was recently highlighted by a transaction done by our digital infrastructure team, by the team at Cordiant.
They purchased a Belgian data center platform, and part of the funding for that came from a continental insurer through an SPV. So in effect, there was the investment company and an SPV fully aligned, economically aligned, governance aligned with the investment trust that together deployed capital in an interesting opportunity, and whilst I can make no promises that we'll be able to do this, this toolkit, this set of relationships that we have is certainly something that we can bring to bear to assist the HydrogenOne team in developing this portfolio to the benefit of shareholders, so I'll end my remarks here by saying that Cordiant is a specialist firm. It's a partner-owned firm, a firm dedicated to the art of investing in infrastructure, focused only on three sectors, of which the clean energy transition is one.
We're highly enthusiastic about bringing Richard, JJ, and their team into our family because we think that hydrogen is a sector which is already large, and it's promising because it's a critical part, not the only part, but a critical part in the journey towards a lower carbon economy and, frankly, a journey towards bringing Europe greater energy security, so we think with that, notwithstanding the odd bump in the road, with that, we think there is a great deal of promise ahead, and together we can bring many more resources to serve you as shareholders, and we look forward to doing so together, and gentlemen, Richard, JJ, I'll pass the microphone back to you.
Thanks, Ben. I mean, just to underscore Ben's point there about the immediacy of the growth potential in the hydrogen sector, which is now. Let's just reiterate our strategy, which was about long-term mobility becomes a real growth sector. But the real growth we're seeing in the sector now is the existing hydrogen market. Hydrogen's been produced for decades. It's the gray market today. It's a $170 billion market. And that gray market is converting over to green. And that's where we see the opportunity now. We need to scale up now. We need capital now. This is why we're working with Cordiant. You see some McKinsey data there on the right-hand side talking about the longer-term prospects for the sector. So that's beyond where we are right now, but we need capital now, and that's why we're aligning with Cordiant and going onto the platform to do this.
Interesting to note some numbers behind the hydrogen market from our friends at Fortune. So we've got a $170 billion gray hydrogen market now. That overall hydrogen market, which includes all forms of green and gray and others, is set to grow to $278 billion by 2032. An interesting 6% CAGR. Okay, that's great. But if you go into the details of that gray sector converting over to green, green is a very small sector at the moment. Green hydrogen is a $2.5 billion market. That's set to grow to $144 billion by 2032 within those larger numbers. That's a 50% CAGR that we're looking at. That's what we're trying to invest into now, and that's why we need access to more capital, and that's what's going to happen with Cordiant.
Great. Looking summary, thanks, everybody. Very pleased to announce the formation of Cordiant HydrogenOne. This is in response to the strong growth that we're seeing in the sector and our strong desire to remain competitive in this industry for the benefit of our shareholders, accelerating our market access, enhancing our capabilities as fund managers, and better access to capital to deploy on behalf of shareholders. With that, I'll pass it over to you for a Q&A. There's plenty of time for Q&A, so please do poll your questions.
Perfect. JJ, Richard, Benn, thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the right-hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can all be accessed via your investor dashboard. Guys, as you can see there, we have received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. But JJ, at this point, Sir, if I may hand over to you to chair the Q&A.
If I pick up from you at the end, that would be great. Thank you.
Great. Thanks a lot. There's a number of questions that have come in that are all kind of asking the same thing. What does this fundamentally mean for HydrogenOne shareholders? Perhaps, Richard, you want to pick that up, and then it's Benn over to you.
Yeah, let me have a go first of all. So this means we need access to capital. We need access to international capital on a much larger scale as the hydrogen sector is scaling up now. And it's about timing. We have to get access immediately as the companies and the projects that we've got a line of sight investment in are going ahead. That might not be the perception among the hydrogen sector, among investors. And there seems to be quite a lot of negative news flow against hydrogen at the moment. But believe us, there are scalable opportunities right now. And scale is the key thing. We need to scale up. And I think that's what it really means for HGEN. And Ben, perhaps you can add to that.
Certainly. Thank you, Richard. I think you can really identify three elements. The first is that there will be the benefit of a larger team and more resources working for you as shareholders. The second, which we've all discussed in a variety of manners throughout this presentation, is an expansion of opportunities to tap into other sources of capital beyond the investment company, the investment trust universe. And I think together, those can bring the third thing, which is the ability to deliver continued and even stronger results for investors. Obviously, we make no forward-looking statements, but that really is the aim. So those would be the three things that are at the top of the list. There are obviously others, but I think those are the things that are at the top of the list for you as shareholders.
Great. Again, there's a number of questions on a similar theme here. So why did Cordiant see this as a valuable opportunity given that there's quite a lot of negative press coverage on the hydrogen sector at the moment? So Benn, I think that's one for you.
Certainly. I spent most of my career investing in digital infrastructure. And throughout that career, I've seen that market cycles bring periods of bright, even excessive sunshine and periods of great gloom. And the weather forecast for hydrogen right now is overcast because of some news items that have come through, largely driven by government uncertainty. But the weather looks set to change over the next coming years, and a brighter forecast, I think, is in view. Hydrogen is a large market today. Hydrogen is critical, as we've talked about, for both the energy transition and energy security. Major industrial companies have a vested interest in the success of this sector. Right now, if you look through the current overcast period towards those factors, you can feel confident about adding these capabilities onto a platform, and that is the call that Cordiant has made.
Great. I'd like to just throw some extra numbers into that. I mean, the hydrogen market today, 90 million tons per annum, as Richard mentioned, the gray hydrogen market, which is a big market, but it's a highly polluting sector because that's hydrogen that's manufactured using fossil fuels. Now, clearing that up, using clean hydrogen. So today, there are 300,000 tons of clean hydrogen on stream around the world compared to 90 million tons of the total market. Under construction, another 3 million tons of clean hydrogen. Capital cost of that, EUR 40 billion or so. Serious money, serious projects, not a science project, genuine industrial activity. When that's delivered, that's only 4% of the cleanup activity that needs to happen in the gray sector. So there's a lot happening, and there's a lot to go for despite those headlines, and then look at a government level.
Here in the U.K., new Labour government, obviously, they have already committed GBP 6 billion to various forms of clean hydrogen and CCS, and we think there's a lot more to come there, particularly in the hydrogen-to-power sector. In Germany, another target market for us. The government's changing, but there is a 9,000 km hydrogen pipeline going ahead with government funding of EUR 24 billion, so despite the, as Ben says, the overcast weather and the bad headlines, there's a lot of positives in this sector. We think that's very much worth going forward investors. Okay. Next question. I think several questions again on the same thing. Richard, this is for you. I think who is running the investment advisor? Who is the advisor to HydrogenOne Capital after this announcement? And when do you get access to Cordiant resources to help you to do that?
Yeah. Okay. Well, I mean, effective immediately, we're all part of Cordiant. And we have access immediately to the Cordiant infrastructure, the other Cordiant team members. But in terms of the mechanics, JJ and I are still the directors on all of our portfolio companies. We've had conversations with them this morning, reassuring them of that fact. It's the same team working on the same projects. We are the hydrogen specialists, and that's how things are going to continue.
A question for Ignacio. Thanks very much. Can you publish the shareholder percentage ownerships of the companies where HydrogenOne is invested? Ignacio, we do that already, actually. It's in the annual report. If you could drop us an email to the inquiries email address, we can certainly provide you that information after the call. There's a question from Pim. Pim asked, do you expect any changes regarding ESG approach? Nope. This is an SFDR Article 9 proposition. The KPI for ESG is avoided GHG emissions. We've avoided 160,000 tons since the inception of the fund. There's a question here. Richard, I think this is for you. Will the portfolio managers be committing time to other funds, other products as a result of this transaction?
We will remain as hydrogen specialists. That's all we've done. That's all we're going to continue to do. So for the time being, we are completely 100% dedicated to HydrogenOne.
We will, however, be ensuring that there are additional resources and additional team members. So you'll be getting more for the same money.
Question from RS. Will HydrogenOne still be listed on the London Stock Exchange? Answer, yes. We collectively believe in the investment trust model. We believe in the business cycle, and we think investment trust listing is a good place to be. So a question from Andrew L. I think, Andrew, thanks for joining. You're a frequent participant on these calls. So I'm a supporter of HGEN's geographical focus on the EU. Will that strategy continue, or is it too early to say? Well, Andrew, our mandate is actually OECD, which is obviously a bit broader than the EU. I mean, the reality is our deployment so far has been in the European Union and the U.K. There are, as you know, statistical changes underway in many important hydrogen countries around the world: the U.S., Germany, recently the U.K., etc. And we just monitor that pretty closely.
But I think no change to that OECD mandate. Just looking. I think we've addressed most of these questions.
Yeah. Is it?
Sorry, Richard. Jamie, is this an acquisition or a merger? What share price has this been done? So Jamie, thanks for the question. This is not a share price-related transaction. This is a transaction which affects the investment advisor to the fund and not something which is to do with the listed shares. So there's no impact. There's no share price embedded in this transaction.
Yeah. It's a question about how will this improve HGEN's access to capital markets? I mean, really, this is about access to private equity, the private equity market globally. We've got a bit of an EU focus. Cordiant, of course, coming from North America is giving us greater access over the pond and debt markets as well, debt into the companies and possibly into the portfolio as well. It really just expands the capital horizons for investors, and we expect the discount to the current share price to improve, to lessen as we go on and demonstrate that.
A question from John C. Thanks, John. Could you comment on the potential impact from the current German political situation, and when could that be resolved? I guess the answer to that one is elections. But look, in Germany, we have an investment in an electrolyzer business called Sunfire. Their order book is global, so they're not particularly affected by the political change in Germany. In terms of Germany and its hydrogen legislation and hydrogen support, it is one of the more advanced countries from our perspective in terms of investing in the hydrogen sector. They've enshrined RED II into laws. So RED II is the renewable energy directives. They are about to enshrine RED III into laws. They've set a pipeline network for pure hydrogen, which will be a 9,000 km network with EUR 24 billion of government funding coming in behind that.
Going forward, I think what we and other observers are watching out for in Germany and other countries is green gas blending mandates into natural gas grids. So a requirement to put clean gas into legacy fossil fuel networks, and as and when that legislation comes, that will be an important demand pull for clean hydrogen beyond the gray gas, the gray hydrogen sector that we talked about on the call.
Will the current investment manager be paid for the merger in any way? Have they got any sort of buyout? Answer, no. There are no changes to the investment manager agreement. We'll go on to the Cordiant payroll, and we're paid accordingly.
I think, guys, we've addressed the questions that I'm seeing on the perhaps last chance for anybody to poll a question.
Did we answer the one on agriculture back up there?
I mean, one of the interesting areas that we see immediately. We've talked about the sources of the hydrogen market now. A big part of the hydrogen sector currently is going into making ammonia, which is going into fertilizers, and of course, we've got cross-fertilization with Cordiant there because there's an agricultural platform which we can feed into, and that's going to be a great source of generating new projects and ideas for us to invest in, as well as bringing that capital across to looking into the fund. Ben also mentioned a data center transaction. The electrification of the world, the growth in electricity demand, a lot of that's going into data centers, as we know. We're getting access into that market now through that being part of the tech fund. Maybe Ben could add to that as well.
We're very much looking forward to the kind of conversations between the teams. Richard and JJ are not only the experts in hydrogen, but they bring a wealth of experience in the energy sector, which will only add depth and texture to the kind of internal conversations. I think Richard's point about agriculture is quite relevant. Cordiant has deployed about $1 billion in agriculture over the last couple of years. I think there are a great many points of contact for portfolio companies to build value for the teams to gain greater insight and to talk to each other. Likewise, the data center sector has become an enormous consumer of electricity. There are other areas where hydrogen is probably going to play a role.
Just to give you one data point about that, and this is not going to become the largest driver of demand by any means, but it gives you a sense as to how hydrogen has potential over the coming one, three, five, 10 years in unexpected places. The mobile tower industry right now uses diesel generators for backup power at mobile tower sites. But there's quite a lot of discussion in the industry about using hydrogen fuel cells for that purpose. And that's something that the digital team can talk to the hydrogen team about within Cordiant. And you can see very much that cross-fertilization of ideas and opportunities. So we welcome that, and we look forward to that.
Great. Operator, over to you to close it down. Thank you.
Absolutely. JJ, Richard, Ben, thank you very much indeed for addressing those questions there. But JJ, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that would be great.
Great. Thanks. Look, thanks everybody for joining the call. And again, thanks for joining us at such short notice. And with a couple of closing points, everybody presenting on this call firmly believes in the role of clean hydrogen as an important part of delivering the energy transition to net zero. That very much brings us together. The combination of Cordiant and HydrogenOne brings a big seasoned investment platform with great access to the capital markets and great expertise. It combines that with a specialist in the hydrogen sector. And we think that's a very powerful combination. We think this is going to be a leading force, actually, in the clean hydrogen market. And then my final point is we see governments around the world engaging on the hydrogen sector and engaging with strategic industrials to deliver a hydrogen economy.
But there is a gap between the governments, the strategic industrials, and the capital markets. And we very firmly intend to play in that gap and work closely with those strategics and those governments. So watch this space. Great. And Operator, thanks. Thanks very much for the call.
Thanks, JJ That's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session? It will now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of Hydrogen One Capital Growth PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.