Good afternoon and welcome to the Hydrogen One Capital Growth PLC Investor Presentation. Throughout this recorded presentation, investors will be in the listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it received during the meeting itself. However, the company can review all questions submitted today and will publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll, and I'll now like to hand you over to the team from Hydrogen One Capital Growth. JJ, Richard, good afternoon.
Hi. Good afternoon. So I'm JJ Traynor, one of the founding partners, Managing Partners of Hydrogen One, joined by Richard Hulf. We're going to take a few minutes to turn the slides and show you what we're doing to add value for investors in the exciting hydrogen sector, and then there's plenty of time for Qs & As. The disclaimer statement. So look, the agenda for the call, I'll take you through the results, the valuation process, and give you an ESG update. And then Richard will talk to you about the portfolio, including information on the value drivers of the portfolio. We've published two new reports for you this morning, and they're both on our website. There's an annual report, and there's also a sustainability report, which is the first time we've published one of those.
We do get a lot of interest in the sector, the industry, and what's going on inside our portfolio companies. And so we put a lot of information into these reports, particularly about the companies that we've invested in. So we do hope that you find all of that useful. In summary, good to see the NAV rising to GBP 133 million over the year. That's up 6%, and of course, NAV per share also rising by 6% over that time. What's driving that is growth in the underlying portfolio. To give you an impression of that, revenues have increased in portfolio companies by 125% year-over-year to GBP 74 million, and there's more growth to come from many of those companies. Investment for the year totaled GBP 10.6 million, most of that in follow-ons. And so far in 2024, we've seen new strategic investors coming into portfolio companies.
We've seen EUR 600 million of funding announced at Sunfire and Elcogen, which very much underscores our valuations and thesis there. In a transaction with HH2E and its investors announced this morning, we've added a new position for our investors through HH2E. GHGs avoided for the year 91,000 tonnes. Cash and listed shares, so cash and cash equivalents at the end of the year, GBP 7 million, which is roughly two years' worth of cash at current burn rates. Obviously, that number's reduced a bit since the end of last year. Just to remind everybody what the clean hydrogen sector's all about, the graphic on the chart which I've shown you a few times before now. On the left-hand side, there are renewable energy, wind or solar, going into electrolysis, which then splits water into hydrogen and oxygen.
And then that hydrogen becomes an energy storage medium or an energy carrier for that renewable power. And the hydrogen can be used as a gas across the top of the chart there in things like fertilizer manufacture, plastics manufacture, and oil refining, or it can be converted back into electricity using fuel cells. And then that electricity can be used for portable power, off-grid applications, or heavy transport, truck, trains, and buses, and so on. Why do you do any of that? You do it to reduce greenhouse gas emissions, displace fossil fuels from the energy system, and address climate change. So that's what the clean hydrogen sector's all about. What we're all about is investing in high-conviction positions in a concentrated portfolio. Our top 10 holdings are over 90% of the NAV. We're investing in revenue-generating equipment businesses.
We're investing in hydrogen supply projects that will be revenue and cash-generative in the middle of the decade. We like to co-invest with industrial investors, strategic investors, and obviously other institutions. We look for diversity in the portfolio to manage risk, and that means a global allocation of capital. Of course, we want to have a flight plan for an exit for our investors, and so that's via an IPO or trade sale over time. The results for the year, these are the figures that we essentially showed you with the Q4 fact sheet. These have now, of course, all been verified by our auditor and, again, by the board. NAV for the year driven or the growth in NAV for the year driven by improving valuations in multiple private positions, which is, I think, really the benefit of our diversified portfolio approach.
Capital deployed in low-carbon growth now over GBP 100 million. Avoided GHGs since the IPO. That's totaling 141,000 tons, which is a lot. All of that underpinned by a strong and improving macro situation in the hydrogen sector driven by climate change themes, air quality themes, improving air quality, and energy security. There are some slides in the appendix to this presentation on the macro, and then obviously pleased to take any questions on that at the end of the presentation. Looking at the results in a bit more detail, on the left-hand side there, those are the moving parts of the NAV year-over-year. A rise in valuations in multiple private positions, totaling just under GBP 0.11 per share. We would characterise all of this as organic growth. You can see the movements of the NAV over time on the right-hand side there.
Organic growth is the companies deliver what they're supposed to do as per their business plans. What's not in these numbers is the benefit of exits. We are busy with portfolio companies to deliver some exits, and of course, those exit multiples should be an important part of our returns targets over time. This one, just to give you a bit more visibility, shows a breakdown of the NAV growth and the NAV movements per company across the whole year. So this is the entire portfolio. Obviously, we want to give you as much transparency as you can take with these presentations. What's not in these numbers is the impact of higher discount rates. So the discount rates moved from 13% at the end of 2022 to 14.1% at the end of 2023.
That actually wipes out GBP 0.07 per share from the NAV over the year, and of course, that's all baked into the figures that you see on the chart here. Just to go into a little bit more detail, this shows the major up movements and the major down movements in the portfolio across the year. So working from the bottom of the chart and upwards, NanoSUN is a business that we are restructuring to a 100% owned business, which is now called Swift Hydrogen. And we're doing that restructuring following a slowdown in the UK hydrogen for transport sector. The business is now being held at a lower valuation pending a relaunch from a leaner baseline. And then moving up the chart, HH2E Thierbach, that's a development project that's held at cost as per the IPEV valuation guidelines, and that's typical for a pre-FID project.
Then the other positions you can see all growing across the year, fuel cell, electrolyser, flight innovation, and high-tech pipeline businesses, all delivering on their growth plans and revenues moving up accordingly. Investments across the year totaled just over GBP 10 million. One of these investments at the start of 2023 put into a new position, HH2E Thierbach. That's a development project that's scheduled for investment decision in the next year or so in Germany. The other investments, the other five are follow-ons into existing positions, typically providing bridging finance into future funding rounds where we use convertibles and providing more growth finance. Total GBP 10.6 million in Germany, the U.K., the Netherlands, and in Norway. Let me make some comments on valuation. As we've said before, the company applies a consistent and unchanged approach to portfolio valuation centered on discounting cash flows using the IPEV guidelines.
The valuation of the entire private portfolio is reviewed and approved by the board per quarter, and it's reviewed by the company's auditor, KPMG, once per year, and we've just been through that process in the last couple of weeks. The private portfolio is valued either using a DCF method or a combination of DCF and the price of recent investment. DCF valuations are also benchmarked against listed peer group valuations in our valuation process. Portfolio average discount rate for 2023, I think I've mentioned, was 14.1%, which is 1% higher than 2022, so higher on an already high baseline, reflecting our quite prudent approach to carrying values in the sector. I think overall, we see this as a robust, challenging, detailed evaluation process, which we think should give confidence to our investors and confidence to our investors.
In the annual report, you'll see more details on the movements and valuation method that we've used for each portfolio position on a quarterly basis since we invested, and this is a snapshot of some of that information. Please do look at the annual report if you want to get more out of that. We are sometimes asked about the performance of our share price and the NAV and how these two things go hand in hand. Listed hydrogen shares, the grey line on the left-hand side of that chart, listed hydrogen shares have come under considerable pressure in the last 18 months to two years, as have the share prices of listed funds, listed growth funds, right across the market. We're not immune from that.
What's causing that weakness in listed markets is higher interest rates, higher discount rates, a risk-off attitude from investors to new energy themes, and obviously the pressure from the Ukraine war, Russia coming out essentially to fuel the markets and the changes that are therefore happening in the energy system. And so what that means with our NAV, the orange line on the left-hand side rising gently over time, is that the gap between our NAV and our share prices widened across 2023. We are working hard to close that gap by demonstrating value for investors, maintaining the company in good order pending what we expect to see improving market conditions over time, and delivering exits for our shareholders to crystallize value. Before I hand you over to Richard, let me make some comments on the ESG side.
Fundamentally, what we're doing at Hydrogen One is investing in positions to avoid greenhouse gas emissions that displace fossil fuels to help to mitigate climate change. As we continue to develop the company's ESG agenda, we're pleased to reintroduce today our first standalone sustainability report for 2023. This has been built on the new ISSB standards, which will shortly replace TCFD standards. What that means in practice is enhanced disclosure, scenario analysis for portfolio companies, and updates on the sustainability strategies of each of the invested positions. As an Article 9 fund, which is the highest standard of ESG fund out there, we do benchmark ourselves against EU Taxonomy, where we are 92% aligned with EU Taxonomy again, which is a high number. We submitted our first PRI report this year, and we started disclosure on CDP.
Avoided greenhouse gas emissions. You can see the figure on the chart there: 91,000 tonnes. That's the GHG emissions which were avoided. That is 325 x greater than the emissions from the portfolio companies. So that gives you an order of magnitude of the activities that we're doing to avoid GHGs. So with that, Richard, over to you.
Thanks, Xenia. So I'm going to take you through the portfolio with a few highlights. Not really much has changed financially apart from the whole thing's now been audited. But really, we've had some post-close announcements from Sunfire, Elcogen, and HH2E, and I'm going to take you through that in a moment. Just a reminder about the summary of the funds. In the table on the right-hand side there, you can see how the fund breaks down by company and proportion of NAV. As you can see, private assets dominate.
On the two pies on the other side there, the theme investment and the geography. 95% of this fund is invested into these companies that are private, with a small allocation into listed names, about 2%, and that will reduce further as we see more investment into the private companies. We invested into revenue-generating supply chain companies, that large 60% supply chain weight that you can see there, in the U.K. and the EU, and developer companies with plans for production mid-decade. We co-invest with some great strategic industrials, and we'll show you more of that in a moment, some real world-class institutions. We look for portfolio diversities. We've shown you before, we're covering the entire value chain here from hydro production on the left all the way through to applications on the right. So who do we invest with?
We've listed out for you the investment companies there on the left-hand side, and you can see some real world-class names there. A lot of strategics like Hyundai is a new name that's come in with Baker Hughes investing into Elcogen. We've got obviously Shell and Chevron looking to diversify with Strohm. HyCap, a new investor with us in Gen2 Energy, the Norwegian hydrogen developer. So we're not the only ones. This is a place where it's led by world-class institutions, which should give investors a lot of confidence about where the hydrogen sector is going. We've just pulled together in 2023 sort of portfolio newsflow review. I'm not going to go through every single one.
It's a lot of detail that you can pick up on later, but in Q1, we had HH2E launch the Thierbach project, the first 100-megawatt green hydrogen project in Europe, and plant expansions with Strohm making pipes in the Netherlands and Sunfire electrolysers in Germany, the emphasis being on industrial scale and build-out of factories. In Q2, Gen2 launched the Mosjøen project in Norway, another 100-megawatt project first, and Strohm went offshore in the Netherlands with the HOPE project. In Q3, Sunfire was awarded a 100 MW contract for a refinery project, which is also backed by EUR 169 million in grants. Elcogen also benefited from grants in Q3 with EUR 125 million coming in for them. In Q4, hydrogen offtake agreements were announced, which is a very important step for the two green hydrogen producers, Gen2 and HH2E.
Elcogen announced EUR 45 million of funding from Hyundai, a real interesting move of their product, their solid oxide fuel cells, into the shipping sector. Just to give you a bit more detail on some of the post-end-of-year events, there's been a lot of news in the portfolio, and HH2E has been the first. We invested EUR 5 million this year, remember, into HH2E in 2022, gave us 11% objective of that business, one of the first project developers in the portfolio giving investors access to green hydrogen projects in Europe. HH2E owns the investment rights into a portfolio of green hydrogen projects in the industrial Rhineland and West Germany, including Lubmin, which was carved out of our previous investment. Previously, our investment in HH2E came with investment rights into five project SPVs, so the value was held outside of the Topco company.
This morning, we announced an agreement to consolidate the rather complex SPV structure up into Topco. So after the consolidation, the project SPVs will be moved directly into HH2E, the company, including the Lubmin project, which we did previously own, which is essentially a new position for our investors. So overall, this change better positions HH2E for its upcoming first FID and Series B that should be accretive to our investments over time. So an important announcement that came out this morning. Also, in 2024, Sunfire, which is the largest holding in the fund, as you know, is a leading alkaline and solid oxide electrolyser business with an HQ in Dresden, as you can see down there. Sunfire recently announced the close of a EUR 500 million funding round, including EUR 215 million of equity and capital from HGEN as part of that process going into convertible loans.
This leaves Sunfire as one of the best capitalized electrolyzer names out there and well positioned to grow its capacity to gigawatt scale as we go into 2024 and beyond. Elcogen, another great company of ours, originally invested GBP 20 million into Elcogen, wearing just under 10% of the business late last year. Early this year, Hyundai and Baker Hughes and others invested a further EUR 140 million in the latest funding round. The investment will be used to expand Elcogen's manufacturing capacity to 100 MW to meet increasing demand. Construction commenced on a new manufacturing facility in Tallinn, as you can see on the right-hand side there, before the end of the year. It should be completed in a year to sort of 18 months to two years.
The investment by Hyundai also comes with a strategic intent to set manufacturing joint venture in South Korea, and we're looking forward to updating you on that in the future. Technology is an inescapable part of the fund. It's got to be tried and tested technology. The way you measure how ready technology is by the technology readiness level, TRL 8-9, the highest ranking of technology, underpins the investment in the fund. We've given three examples here. The first is Bramble on the left-hand side there. This is all about the lightweight, high-performance fuel cells for the mobility sector made from printed circuit board material, easily manufactured, cheap, and shapable, and being used by Tier 1 auto manufacturers like MAHLE, and that's already been announced.
HiiROC in the middle are now scaling up its HiQ plasma electrolysis to the HiCom unit, and these will be running continuously sometime this year. So we've really gone from the development and testing phase out to the commercial and scale-up phase, and we'll be seeing a lot of that being deployed in the sites of Cemex and Centrica. On the right-hand side there, we've got Cranfield, who specialize in producing the hydrogen propulsion system that goes into turboprop aircraft by solving the heat generation aspects of in-flight hydrogen, and that's been done with companies like Britten-Norman, and Dronamics, and others, and you'll see a lot more of that this year as well. In terms of the green hydrogen projects, they're a very important part of the fund.
HH2E in Germany has already mentioned a close to FID with lead banks, and equity investors are identified along with green electricity PPAs and hydrogen offtake agreements in a central part of getting the electricity into those plants to split the water, and people are signing up to buy that hydrogen. Gen2 in Norway in the middle, sites approved and ready to go, infrastructure for hydrogen export approved, and hydrogen offtake also agreed as well. These projects are real, and they're now about to start being built. And then Strohm in the Netherlands are expanding to meet international demand for its TCP pipe, high density used in the HOPE hydrogen project offshore in Belgium. So these are real projects. They're going ahead. They're getting backed, and they're funded. And these are all revenue-generating companies as well. So what about how much that's increased since we invested into these businesses?
So on the chart on the left-hand side there, you can see revenue growth by company since we invested. The earlier investments into Bramble and Sunfire have grown the most, 10x-15 x since we invested, and the more recent investments into HiiROC, Strohm, Elcogen, and HH2E have grown 1x-6 x but have great potential. And we add up all the revenues from the fund in total on the right-hand side there. On a 100% basis, we've generated EUR 74 million in revenues in the last 12 months, up 125% from the equivalent period Q4 2022 on a pro forma basis. So growth is real, and it's accelerating in 2023, and it will carry on accelerating in 2024. In terms of what value has this created, it's a very well companies generating revenues and going on to EBITDA.
So we've split out the portfolio by early, mid, and high growth. Early-stage companies like HiiROC are going from the pilot phase to the certification and sale phase in the early stage. HH2E is just about to take FID, as we mentioned. In the mid-stage, we've got Bramble supplying products into the auto applications, as an example. In the high growth phase, we've got Elcogen, Sunfire, and Strohm building larger factories for global expansion and EBITDA. This will lead to new fundraising, higher valuations, mergers and acquisitions as these companies get taken out of these exits and acquisitions, and ultimately IPO. So that's really how the portfolio is set up to perform. It's already performing well just on a straight revenue basis, but we'll be moving into an exit phase as we go into 2024.
So just like the summarizing flows out there, 2023 has been a challenging year for everybody, for the global economy, finding its way out of COVID, dealing with high inflation and interest rates, but energy consumption continues to increase. Our NAV in the fund continues to increase by 6% in 2023. Strategic investors are taking a long-term view and continue to invest and support this sector. Fund liquidity of EUR 7 million, as JJ mentioned, underpins the liquidity in the fund, so we can carry on doing this. We'll see capital being recirculated into the fund as we exit selected positions over the coming years. As the market starts to recover, there may be other ways to raise funds as well. The world is decarbonizing, and hydrogen is the only choice in industrial applications and in heavy transportation. This will continue. This has to continue.
Thanks very much for listening, and that's the summary of our annual results.
JJ, Richard, thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab situated on the top right-hand corner of your screen. Just while the company takes a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via our investor dashboard. JJ, Richard, as you can see, we have received a number of questions throughout today's presentation, and I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.
Great. Let's get started. I'll have you with the first one. So the question from Dave, thanks for the question. It's about where are we in terms of divestments from the portfolio?
Yeah, I think what Dave's question is about is exactly that. Yes, we need to recycle capital within the portfolio initially through exits. And we've hinted, well, obviously we can't say which ones, but several of our investments have already appointed investment banks. So the way that we feed the fund, which obviously needs to carry on consuming capital, that's just business. We'll be done on that basis until, and who knows when, but we're not counting on that happening anytime soon. Markets recover, the investment structure for investment trusts recovers, and we can raise further capital.
So we're very comfortable about the line of sight that we've got to that capital being recirculated into the fund.
And Dave, you're also asking which holdings are to be sold and the timings of all of that. I'm afraid we can't give information like that on a call like this. Rest assured, we are busy with it, and we will update you as and when those divestments come through.
It's a very broad question. Are the shares going to be diluted? Well, possibly, yes, but that's nothing compared to the exit multiples that we expect to get from these companies as we go forward. We would obviously like to keep up with some of these companies. So in the worst-case scenario, yes, we showed you the matrix of other investors in the fund where we can't invest into a small fund raise.
Our other investment colleagues will step in, and there may be some dilution. But having said that, we have secured anti-dilution mechanisms through most of our investments, so we expect to be covered by that for the next round of investments over the next year. And then hopefully, the markets have improved towards the end of this year and into next year where we can come back to markets to raise more capital.
And I mean, within that, one of the pretty significant questions: Are the shares going to be diluted, and how have you avoided dilution? I mean, it's a bit to Richard's answer there that we have been using those anti-dilution clauses in some of the investments that you've seen in 2023. There's a question from James B. Do you have any further details on the timelines for HH2E, Lubmin, and Thierbach FIDs?
We were previously investing FID for Lubmin at the start of 2024. We would expect—so these are Germany green hydrogen and battery electric storage projects hosted by HH2E or developed by HH2E. We would expect to see the first FID—FID means final investment decision—during 2024, and nothing's changed in that regard.
How can private valuations, John, now hold up reasonably well when compared to public listed hydrogen equities? I do not expect you to commit on listed names, but would you say that the quality of the listed companies is lower than—yeah, it's an interesting answer to that point. In listed markets, if you say to the market, "We expect earnings to be X by date Y, Y being the next quarter," and you don't hit that target, you fall out of the market. If you do it twice, you really fall out of the market.
If you do it 3 x, you're finished. But in the hydrogen sector, as in any new sector, three, six months is a relatively short period of time. So I don't think the quality is any less of some of those listed companies. They're just in the wrong place with the wrong kind of investment audience. If you look at the investment patience and investment horizons of some of those strategic investors that we've gone along with, a year is an incredibly short amount of time. These investors have a five-year investment horizon, and I'm not saying that we need to wait five years for some of the things to happen in this fund, but it's less predictable. It's not so much quality. It's just about having an insight and an understanding to the way the hydrogen market is working.
And it's working well, and we don't mind if somebody is three months late or there's a three or six-month move in something, as long as we're on track, and we are on track, and the hydrogen sector is moving in the right direction. But sometimes it takes longer, or it's less predictable than listed markets think. Sorry, bit of a long answer, but I hope you got the gist.
So there's a couple of questions about divestments from Miguel and Nigel, so thanks for your questions. This is around what are the drivers behind exits? Is it the investors that want to get out? Is it the companies that want to sell themselves? And then how do you decide when to exit? Where's the appropriate valuation trigger for the exit?
Look, in terms of the motivation for exit, it tends to be driven by the investors rather than the companies. I think this is the bit where investors really drive the agendas in those portfolio companies. It's not impossible that there will be consolidation in this sector and kind of unsolicited offers for businesses. We would expect that over time, but the activity that we've got is very, very planned and very controlled, and it's an investor's decision to try to get an exit. In terms of the value drivers for exit, I mean, we're targeting a level of return in the fund. I think we've talked consensually about 10%-15% turnaround return over time, and we would look for those sorts of multiples on divestments.
It's possible, I suppose, that the board would have a discussion about accepting lower valuations for cash management, but certainly our intention is to achieve those target returns. And then Nigel, I think another part of your question is what will you do with the proceeds of those of the divestments? I mean, I think the sort of standard answer for that is that that's a decision for the board at the time, and they would look at the financial framework of the business and the opportunities that are on the table to invest. But fundamentally, this is a growth fund. We have ample opportunities to continue to add value for shareholders, and we would, I think, default to reinvesting in existing portfolio with potentially new positions as and when those investment proceeds come through.
I suppose it's worth addressing the point about share buybacks. There are some funds that have got a lot of cash. They've got a lot of cash coming in from a yield play, and their growth trajectory is kind of like that. It's a well-established, steady, ongoing market. That's a very different market to the hydrogen market where growth is like that. If you step out and you don't keep up with the growth, you lose out. Plus the fact we are a relatively new fund, and until we can raise more capital, we've got enough cash to carry on running the fund. Any capital that we get out, we don't want to jump off of the train that's running fast. We want to reinvest that capital.
And actually, from what we've seen in this very difficult place that us and a lot of our contemporaries are in the investment trust world, when people buy back shares, there's a bit of a round of applause and an adjustment in share price, and then it drifts back down to where it was before. So we were not convinced that even if we did have the cash, that it would add a lot of value anyway.
There's a couple of questions. So my guess is asking around what percentage of the fund is covered by anti-dilution clauses and Paul D asking, "How do you influence an investment once you've made it in terms of invested companies, priorities, and so on?" I mean, a couple of points in common between those two. Everything we've invested in comes with anti-dilution clauses, and everything we've invested in comes with a role on the board. In terms of influence on the board, we're very careful to make sure that before we invest, we're aligned with other investors. And then us and the other investor directors tend to have a very sober, very standard conversation with company management about business plans, KPIs, delivery of targets, and so on. So this is kind of normal business practice through those board seats.
I suppose anecdotally, the behavior on these boards is that most of the co-investors that have got very, very long investment horizons, I suppose of all of these funds, we're slightly more impatient because we need to prove to the investment market that this model works, and we'll do that by selling at multiples as we go forward. So there isn't any pressure on any of these businesses of other people that want to get out too soon. So that's generally what's going on.
Pim's asked a question, Colvin, it's on near-term funding requirements, and do you need to do follow-on investments if you consider raising debt? Pim, we're not committed to any follow-on investments, simple as that. This is all about choice. In terms of debt, when we did our IPO in 2021, we did ask for a mandate from shareholders for up to 25% gearing on the fund. We have those authorities from shareholders, but as we stand today, there's no debt facility in place.
I think something like a revolving credit facility would work quite nicely, but that would be relatively small just for covering fund costs, really.
I'm just trying to have a slight technical problem here.
The annual return point of 10%-15%, and I think we've mentioned that number before, is a sort of a also includes exits from the businesses as well. So you may look at the NAV each year and say, "Well, it's not going up by 10%-15%. What's going on?" Well, that's because there have been no exits yet that would get factored into creating that sort of a return. But we're going into that window now, and we should be giving you more news about that this year.
So Nigel is asking about the time horizon for investments and how do you make sure you're aligned with other investors to have the appropriate timeline. And Brian's asking about anti-dilution clauses and how they work in practice. So in terms of alignment with investors, it's part of our due diligence before we make the investment to make sure that we're all on the same page in terms of what we expect in terms of holding period and then exit. And then, of course, as you progress through the holding of the company, those views are refreshed in the normal board process. Anti-dilution clauses, so to Brian's question, how do these work in practice? I mean, typically, there's a very complicated formula that sets out if investment comes at level X, then you're entitled to shares at a valuation of X minus something, and that discount, typically 20%-25%.
Those clauses are triggered usually with a payment for nominal shares, so one-pound share, one-pound share, when subsequent investment comes through. So, Chris, that's it to your question.
Do you expect to keep making new investments? Yes, we absolutely do, but it's sort of contingent upon recycling capital. So at the moment, we need to exit to reinvest, but we've got a very live pipeline of new investments we want to make. And so the answer is yes, but it's contingent upon recycling capital and raising new capital.
There's a question from Barry, Jack, and Barry, which is, "Do you think hydrogen cars will overtake battery-operated cars?" I don't know if you mean speed there, Barry, or market share. Maybe it's a bit of both. So hydrogen cars versus battery cars and how to think about those two things. I mean, I can't argue. I mean, we're a bit open-minded on this, but I'll argue as being that battery electric is going to work very well, does work very well for light vehicles, sedans, over reasonable distances, and that hydrogen isn't really in that light vehicle world. It does work, but it's a little bit more capital-intensive. But where battery is not so effective and where hydrogen does really kick in is heavy vehicles, so trucks and trains and buses.
And we are seeing quite a lot of momentum in the truck industry, in particular, in terms of converting from diesel into hydrogen. And there's legislation coming through in different regions at different rates to actually require a phase-out of diesel from heavy transport, which very much plays to hydrogen. Barry, take a look at what's happening in California in terms of diesel phase-out. That's a very high-potential market for hydrogen trucks, perhaps not for cars, but for hydrogen trucks. Maybe, maybe, Ronnie. I think we're.
There was a question from Philip, which is really around the discount of the share price to the NAV. And what do we think that Philip, what do you think the drivers are to turn this around, and when do we expect that to occur? Look, I mean, our share price, I mean, we can't be happy with that share price, and I'm sure investors who came at the IPO are not comfortable with that share price either. We do think that there are external factors here, rising discount rates, rising interest rates, that put all of the listed fund sector under tremendous pressure. And listed hydrogen companies' share prices have come under pressure for reasons that are specific to them. So we have got rather caught up in that difficult market sentiment.
We think that by continuing to be proper good stewards of the invested positions, manage our cash flows carefully, and fundamentally deliver those exits and show that cash return back to our investors, we think that's the way to improve the sentiment on the share price. And that, plus improving markets over time, we think we'll get our share price back into a better place. So look, we do take this extremely seriously, and we're working on this as best we can.
Okay. I think we're sort of maybe are there any more questions? We're kind of running out here.
JJ, Richard, if I may just jump back in there. Thank you for answering all those questions that you carry from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to yourselves and the company, Richard, please, can I just ask you for a few closing comments?
Yes. Look, listen, everybody, thank you very much for continuing to support Hydrogen One Capital. This is definitely the right place to be to invest into hydrogen. Things can move very quickly in this market, let's not forget, at the macro level and at the individual company level. And so we're prepared for these positive moves. And we thank you for your patience. Thank you for investing, and keep with us. Thanks very much.
JJ, Richard, thanks for updating investors today. I'll please ask investors not to close this session, as you'll now be automatically redirected to provide your feedback in order that our management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Hydrogen One Capital Growth PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.