Good afternoon, ladies and gentlemen, and welcome to the HydrogenOne Capital Growth plc 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 those responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, I would like to submit the following poll, and as usual, if you could give that your kind attention, I'm sure the company would be most grateful.
I would now like to hand you over to the team from HydrogenOne Capital Growth. JJ, Richard, good afternoon.
Well, good afternoon, everybody. Thanks for joining the call, and thanks for the opportunity for us to talk to you about the fourth quarter of 2023 results. I'm JJ Traynor, one of the managing partners of the fund.
I'm Richard Hulf. Hi, nice to see you guys.
We'll take you through the materials, and of course, plenty of time for Q&A at the end of the presentation. The disclaimer statement, agenda for the call, I'll go through the results, and some of the key figures on the quarter, and then Richard will pick up on portfolio, including some of the financial information that underpins the value drivers for the portfolio companies.
In the back of the presentation, in the appendix, there's quite a lot of information on each of the portfolio positions, and so please do take the opportunity to look at those pages at your leisure. So the highlights for the first quarter, really pleased to see NAV per share rising just over just around 6% year-over-year to just over GBP 1 per share. NAV now sitting at GBP 133 million. Portfolio could continue to deliver strong growth. These are growth technology businesses. Private portfolio revenues are up 125% year-over-year to GBP 74 million for the total private portfolio.
In terms of investments, we made two follow-on investments in the quarter, totaling just around GBP 1 million. Now, alongside that, we've seen new strategic investors coming into portfolio companies, bringing new equity into those businesses, and bringing new industrial collaboration, and Richard will pick up on those strong themes in a moment. Overall, we continue to see a strong and improving industrial fundamentals in the clean hydrogen sector, despite a difficult macroeconomic situation around us more generally. This slide we've shown you a couple of times before. Just a quick overview of what the hydrogen industry, the clean hydrogen industry is all about. So on the left-hand side here, renewable power going into electrolysis, which then splits water into hydrogen and oxygen.
The hydrogen gas is then an energy carrier for that renewable power, and it can be stored over long periods and obviously moved around as a gas. With an end use of that hydrogen as a gas, for example, in oil refineries and chemicals plants across the top of the chart, or that hydrogen gas can be converted back into electricity, typically to move heavy objects, like trusses, like trucks and buses and trains, or for off-grid power. All of this, of course, is to replace polluting fossil fuels in the energy system and avoid greenhouse gas emissions. So that's what the green hydrogen industry is all about.
It's a high-tech sector, lot of IP and a lot of very distinctive components and companies in those value chains. This chart shows Hydrogen One's sector deal tracker for the clean hydrogen sector. What you can see there is $29 billion of fresh investment in the hydrogen sector since Hydrogen One started in 2020. A strong increase in 2023 compared to 2022, where the numbers are up over 400% to $17.5 billion. In that 2023 figure, some landmark transactions, an IPO in Germany, the go-ahead of a major project in Saudi Arabia, and the go-ahead of a major green steel project in South Africa. So a lot happening in this sector, and the trends are very much accelerating.
Now, we're sometimes asked, "Is all this stuff real? You know, where, where, where, where's all this happening?" And the answer is, it is real, and then, you know, the map here shows where it is happening. Strong industrial activity in this sector. There's just over 1 GW of green hydrogen online around the world today. That's a 50% increase versus 2022. And globally, behind that 1.2 GW online, there's another 35 GW + that are in development, primarily in the E.U., the Middle East, and to some extent in North America.
Within all of that, Hydrogen One has rights over 7 GW of green hydrogen projects, which are on the table for the fund in Germany and Norway, and projects in those in that portfolio. We expect to get to final investment decision during 2024. So this is a real sector, it's happening now, and the growth rates are accelerating. This chart is a summary of the fund. It is a concentrated portfolio, it's a high-conviction portfolio. Top 10 holdings are over 90% of the NAV. Where do we invest? We invest in revenue-generating supply chain companies, developer companies with plans for production mid-decade in the middle of the decade. We like to invest alongside strategic industrials and other institutions. We look for diversity in the portfolio.
It means global allocation, right across the value chain. And of course, we want to invest in businesses that have a clear exit strategy for our investors, either through an IPO or a trade sale. This chart shows on the left-hand side, the investments that we've made, those portfolio positions. And then, on the right-hand and the co-investors in these companies. What you can see is big industrials, big industrial strategics, like Shell, like Vitol, like Centrica, all growing their hydrogen businesses. And then, the arrival of ESG funds, not similar to ourselves, companies like Planet First and Amazon and so on.
So, you know, a very diverse, very strategic set of investors coming into these businesses. And as and when this sector consolidates, the leaders of that consolidation are frankly on this chart. So turning to the results in a bit more detail, and you can see the key numbers on the slide here. We used IPEV guidelines to land these numbers, which are reviewed and approved by the board every year, every quarter. NAV per share up slightly sequentially and up 6% year- over- year. The numbers include a 14.1% discount rate, which is higher than a year ago and higher slightly than the third quarter.
Year-over-year, that higher discount rate has removed almost GBP 0.07 per share from the NAV numbers that you see on the screen here. We made follow-on investments in the quarter, GBP 1 million into Strohm and Gen2 Energy, so existing portfolio companies. We've made those investments alongside other investors, typically those strategic investors. All of that leaves cash and listed holdings just around GBP 7 million, meaning the company is in a robust cash position going forward. The slide on the chart on the left-hand side of the slide here shows the NAV movement in the fourth quarter of 2023 compared to the third quarter of 2023, all on GBP 0.01 per share basis.
What you can see is a rise in valuations in multiple private positions, totaling just under GBP 0.03 per share, offset by fund costs. On a longer-term basis, on the right-hand side, our NAV per share has been steady and rising since the IPO in 2021, and we have characterized that as organic growth as the companies grow their businesses, with our backing and the backing of other investors, with small ups and downs per quarter, really around the movements in listed markets, and discount rates. So that's a respectable bottom-line performance as the fund completes its first investment phase. What's not in these figures is the impact of exits.
That's all ahead of us with portfolio companies currently active on divestments, with advisors appointed in a couple of cases. This chart, and I think really with an eye to the full-year results, this shows the movement in NAV right across the portfolio on a full-year basis. End of 2022 going to the end of 2023. We want to be as transparent as we possibly can for our investors here. What you can see across the year is valuations increasing in multiple portfolio companies as a result of growth delivery, and despite that increase in discount rates, which end-to-end has removed GBP 9 million from the NAV across the year, or around GBP 0.07 per share.
So that's a look at the entire portfolio. Now, in terms of valuation, as I said, we do use those IPEV guidelines with a rigorous quarterly review by our board and an annual review by our auditor, KPMG. As we stand today, the majority of the portfolio is now being valued on DCF, the right-hand side of the chart. And on the left-hand side, the orange line is the evolution of our NAV since the IPO in 2021, which is a steady and rising trend.
The blue line on the left-hand side and the gray line, those are listed hydrogen positions, our share price in blue and the broader listed hydrogen sector in gray, which, in contrast to the orange line, are volatile and falling over that period. This really compares the more fundamental valuations that we get from DCF versus listed markets, which are very much sentiment driven and short-term interest rate driven. All of that leaves our shares on a substantial discount to NAV, which is in line, frankly, with other listed private equity funds. None of these figures include exits. We do expect that to come this year.
Exits should push up the NAV as we exit on premiums to the invested capital, and we hope and expect that those exits will catalyze our share price and show our business model back to our investors. So those are some comments on the results and the valuation. I think we should go over to you on portfolio.
Yeah, thanks, JJ. I'd like to yes, unpack the portfolio a bit for you. Just a reminder of how it's been constructed, and give you some examples from what's been happening over the last quarter. Summary of the fund, where do we invest? It's 98%, small allocation to this, but 98% into private positions. We invest into revenue-generating supply chain companies, you can see on the table on the right-hand side there. Even though some of the, a good chunk of the businesses are based in the U.K., a lot of the revenues and the business development is going out internationally, particularly into the E.U.
We've co-invested with a number of strategic industrials, as JJ pointed out earlier, and some world-class institutions. So this is a real sector really underpinned by some high-class investments. We'd expect to see, as JJ said, a number of those looking to really be the catalysts as potential buyers of these businesses as we go into this year. We look for portfolio diversity, so we're investing right through the value chain from hydrogen production in the developers, all the way through from electrolyzers, electrolysis, pipelines and storage, all the way through to fuel cells and applications on the right-hand side. So the chart on the right-hand side there gives you an idea of how the NAV is spread out between each of those different positions.
Let's just focus on one of the positions, HiiROC, which did pretty well in the last quarter. HiiROC make a device which it is a form of electrolysis, which allows you to split methane into hydrogen and carbon. So these are the HiQ units that clean up methane and are gaining a real foothold in the global oil and gas sector for, well, reducing flares. A multi-flare version of the HiQ unit, called the HiCOM, is now in development. And we're really moving into the commercialization phase now, having spent most of last year getting the sort of final sign-off on the basic technology.
We're now expanding the use of these units into Cemex. There was some share trading that went on between Cemex and other parties. It's secondaries in the portfolio, at very much a higher share price than we're currently holding the shares at, which gives us great confidence that, you know, the valuations are heading in the right direction. There'll be continued pilot projects, as you can see an example of one up there with SHV. Centrica are expanding, Hyundai, and Wintershall.
The other thing to bear in mind here is that this is a thermal plasma electrolysis, so it's a gas, using gas plasma technology, but it's now been classified by the government to qualify for additional financial support as a green technology. So we're very pleased about our progress with HiiROC. The next example here is Elcogen. We invested GBP 20 million into Elcogen, and we own just under 10% of this business. They were successful in getting grants of GBP 25 million, and HD Hyundai investing EUR 45 million into the business. That completed in October, bringing in a very important strategic investor. This investment is going to be used to expand the plants and facilities.
As you can see, the site for the next factory on the right-hand side there. The investment from Hyundai also comes along with strategic intent to set manufacturing in a joint venture in South Korea, and we're looking forward to updating you on that as we go into 2024. I think the other key investment we need to talk about is NanoSUN. NanoSUN makes the hydrogen transportation container, the Pioneer. You can see in the picture down on the bottom there, that uses a patented cascade technology to allow the refueling of buses, trucks and vehicles from the high-pressure device.
The U.K. government, as we all know, postponed the I.C. engine sales from 2030 to 2035, and this had a bit of a knock-on effect into hydrogen in the U.K., at least. And this sort of moved some of the hydrogen mobility projects forward as backwards, sorry, into the future. So NanoSUN previously had a U.K. focus with customers like ITM Power, which closed last year. And so we're seeing a real shift of the sales of these units onto the continent and into Germany. And that's going very well.
And we relaunched the business at the end of January, as Swift Hydrogen, and restructured the business with a European distribution and a sort of a streamlined, low-cost lease-based model. And we'll be updating you on the more of the numbers around Swift Hydrogen in the first quarter. The numbers that we've got back at the end of December, we were more of a sort of an accounting view of a transaction that was in sort of mid-cycle. But we'll update markets on that, on those numbers precisely, as we go forward into the next quarter.
Just a little bit to talk about here on the revenue-generating potential of the portfolio since we invested. On the left-hand side, you can see revenue growth by companies, and you can see companies like Bramble and Sunfire have grown the most sort of 10x-14x since we invested up on the top right of that chart. And the more recent investments into HiiROC, Strohm, Elcogen, and HH2E have grown sort of 1x-6x , but have got great potential. If we aggregate the revenues, on the right-hand side on a 100% basis, we've generated GBP 74 million in revenues in the last twelve months. That's up 125% from the equivalent period, Q4 2022, on a pro forma basis.
So it shows that we've got real revenue generation from this portfolio, it's real, and it's accelerating. A little bit about where value is generated in the portfolio. And if we look at what's likely to happen as we go forward, new fundraises at higher valuations are gonna drive value, M&A, as JJ said earlier, and acquisitions and IPOs. Our portfolio of companies range from the early stage companies, at 29% of the portfolio, demonstrating technology, and projects. Projects really are real, but they need to get to the FID stage to release a lot of value not currently factored into the portfolio in terms of Gen2 and HH2E, but something that you will see come along in the future.
Mid-stage, that's about 10% of the portfolio. Projects starting up and new manufacturing going ahead. And late-stage growth, a good chunk, 55% of the portfolio, where we're really starting to see material revenues and growth, that you'll see that in the portfolio coming from the larger positions like Elcogen and Sunfire. And most of the revenue growth in 2023 came from those sorts of companies. So exits most likely to come from the late-stage companies, but also don't discount some of the high-value intellectual property that exists in some of the non-revenue generating companies, still very attractive for potential buyers.
What we can actually say this is real, because two of the companies in the portfolio in the last quarter appointed investment banks in preparation for these sorts of negotiations and discussions. So that's really sort of a snapshot of Q4, and we're well on track this quarter with robust NAV and liquidity of about GBP 7 million, including listed shares. NAV's 103p, up 1.6% on the quarter, 6% on the year, and that's great performance. Portfolio is up 2.7p from multiple private companies, and revenues from those companies up 125%, so at GBP 74 million. So overall, all on track, delivering the growth and value we set out to do. Our next steps will be the exits from the portfolio.
We expect at multiples of invested capital, really demonstrating that this hydrogen model is working. So I'd like to leave it there for now, and we'll pick up on some questions, but back to you.
Perfect. JJ, Richard, thank you very much indeed for your presentation this afternoon. 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 would 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 your investor dashboard. Richard, JJ, as you can see there in the Q&A tab, we have received a number of questions from investors, and thank you to all of those on the call for taking the time to submit their questions.
But Richard, JJ, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so, and I'll pick up from you at the end. Thank you.
Yeah, thanks. So, first question, why did discount rate increase between September and December? Well, you might be thinking that because you were looking at risk-free rates. What we've also got factored into the way we calculate our discount rates is the small company discount or premium, depending on how you look at it. And we've sort of really applied a more rigorous small company premium, and that actually pushed up the discount rate, particularly on the smaller companies in the fund. Can you expand a little more on Vernon's NanoSUN? Yeah, well, we sort of went through that. What we're currently factoring is like an accounting view of the transaction that we'll be talking more about in Q1.
It's a special situation with NanoSUN because we were a minority investor and the only institution, so we've sort of slimmed down the shareholder register, and the founders are out, and now it's just HydrogenOne. And we'll be looking to get further investments into that business as we go into the new year, and move to the lease model, which is what we always wanted to do, but now we've got more control, we can instigate some of those strategies.
There's a question around the Cemex and Hyundai investments, where we talk about those investments in HiiROC and help with underpinning the NAV. So the question about what does that mean in practice? I mean, that investment from those two businesses was done at a minimum at our valuation of the business, the businesses and in some to some extent slightly higher, actually. So very firmly, you know, underpinning our investment thesis on Elcogen and HiiROC. The use case of those proceeds, and Richard talked about the Elcogen Hyundai piece. I mean, this is unlocking significant new growth in that business.
Elcogen are currently doing the groundwork on a new factory in Tallinn, Estonia, to manufacture fuel cell stacks at scale, which will be ultimately exported into the Far East. So we're pleased with both of those strategic investments.
So, to what degree does the company require capital to inject into its invested companies, and how does it expect to raise such money? Well, they're sort of linked in a way, Andrew. I think we have got to demonstrate that the investments we've made, we make a multiple when we exit. And when people see that, they will start buying the shares and volume, and the share price goes back up to the NAV, and then we can go out and start raising money in the market. Really, not just to service the existing portfolio, but to expand this, because with a huge sense of frustration, we are very, very close to every single company and project hydrogen opportunity in the market, but our hands are tied until we can get more capital.
So in terms of where does that new or existing capital go, it will go into those new investments, and one sort of helps the other. I think we need the tailwinds of an improving market and economy, we probably expect to see that this year, who knows when? But it's all looking very positive to us at the moment.
There's a question from Ivan, thanks for the question, around the increasing interest in the use of ammonia as a hydrogen carrier. Yes, yes, we look, we, we agree with that. If you want to transport hydrogen over long distances and at scale, then doing that in liquid form is just more efficient than transporting it as a gas. And, you know, you see this sort of application in the natural gas industry, where natural gas is shipped over long distances as a liquid, liquefied natural gas sector. The problem with liquefied hydrogen or liquefying hydrogen is just the very, very low temperatures that you need to get it to, to turn it into a liquid.
If you convert it into ammonia, you still need to cool it down to turn it into a liquid, but not by nearly as much. So this is an energy efficient way of liquefying the hydrogen energy carrier. I think a subset of that, Ivan, is that we are seeing a lot of interest in the use of green ammonia as a fuel for shipping. And again, it's about efficiency, so you can just store a lot more liquid than you can store gas. One of the logics behind the Hyundai investment in Elcogen is the production of a green ship, so you know, an emissions-free ship.
And the concept that Hyundai have is to use ammonia as the fuel to for that ship, using Elcogen as the fuel cell provider, to turn that ammonia into electricity, to move the ship and to power the equipment. So yeah, great, great question, and very, very firmly a trend that we're seeing in the sector.
Could you confirm that hydrogen is unlikely ever to be used for the supply of domestic gas to households, please? I'm afraid we can't confirm that. The U.K. is in the late stages of years and years and years of testing hydrogen to go to 20% into the National Grid quite soon. But the U.K. is not the only one. Germany is also looking at hydrogen gas grid blending, as are other countries in the E.U. So you're gonna see this coming up quite soon. And it won't be 100%. I mean, all boilers sold in the U.K., I can't remember since which year, can go up to 20% hydrogen already.
So there's not much work to do, and this is zero carbon, if you wanna totally make sense. Our fund doesn't depend on that happening. We are more into industrial applications of hydrogen. But, you know, you asked the question, and, yeah, that's the answer. It is gonna happen.
We've got a pre-submitted question, which is around, I think essentially, can you exit businesses that are not profitable, the hydrogen sector is not profitable? And then a sort of a parallel question on that from Conor around Strohm and its revenue out of 2025. So let me have a go at that. I mean, I think the sort of short answer is that some of these businesses we've invested in are profitable already. So it isn't quite right to say that the hydrogen sector is not profitable. When we look at the financial outlook for our portfolio companies, I mean, 2026, 2027, we see a lot of EBITDA coming into the portfolio, positive EBITDA.
You know, the outlook is good and in some cases, the business is already in that position. And I think the kind of slightly different answer to that question is that we do expect to be able to sell businesses that are pre-EBITDA, and that is not unusual in a technology sector like this, and there's no reason why we shouldn't be able to achieve that with the portfolio that we have today. Within all that Strohm, which is Conor, I think part of Conor's question, Strohm is a Netherlands-based pipeline business. They make low carbon pipes that are used in kind of legacy oil and gas businesses, and I think more specifically to transport hydrogen and CO2.
That is a company that's growing those energy transition applications, hydrogen and CO2, very quickly, and they're, they're targeting, you know, around half of their revenues to come from this energy transition theme, in the next couple of years, 2025.
The question: What is the motivation to exit the two investments for which you've engaged advisors? Are the shareholders of these investments also selling? Well, I mean, it's this. There's complete alignment between the investors in those two cases. We don't appoint the advisor, the company itself appoints the advisor. We approve the advisor, the investment bank, to go ahead and do that. But there's this, there has to be complete consensus between shareholders that this is the right time.
It usually gets started when the company is already entertaining offers from external buyers, and we want to get ahead of the game and make sure we've got the advisors in place to give that advice on which are the right acquirers to go ahead with. What we're seeing at the moment, it kind of relates back to a number of the questions here, is that these are strategic industrials that realize that hydrogen is gonna be a big part of their business within the next sort of five years. And if they don't move into it now, that's very, very short in terms of corporate planning horizons. So they don't need to see EBITDA positive companies.
They need to see companies that have got the right product, the right technology, the right IP, and the right market share potential, and that's what's just driving it more than profitability.
There's a couple of questions around when, when will you exit businesses? So Mark has asked a question around that, and, you know, can you help us calibrate that? And then a sort of parallel question, why is your share price so volatile? What are you seeing in the shareholder register? In terms of the exits, Mark, can we just leave it at 2024? We expect to exit businesses in 2024. I'm afraid we can't be more precise than that. And, you know, there are advisors and other stakeholders involved in those processes. In terms of the share price register, I agree with the comment that there's a high degree of volatility in there.
I think what we're seeing in our register is actually quite a stable set of investors, underpinned by INEOS, who are a cornerstone at the IPO, of course, and institutional and wealth managers, all with relatively static positions, very stable positions. And then, if you like, day trading in more in the retail end of the market. So, that that's how we see the movement in our share price.
We're gonna bounce this between us because I'm not quite sure what the answer is. Are you going to increase early-stage production investments? Well, I mean, I'm not quite sure what that means. One interpretation might be companies that are producing hydrogen, and the answer to that is yes. There are definitely companies beyond Gen 2 and HH2E that we're currently in discussions with for potential investments. I suppose all hydrogen production at the moment is early-stage production, or if it's referring to companies making electrolyzers and fuel cells, we probably would prefer not to be in early-stage production. We prefer businesses that are more mature, that have got a well-established technology, a well-established order book of buyers.
We tend not to go in for the early stage of production or engineering, but with hydrogen itself, we would.
There's a question about what why have listed hydrogen businesses why have the share prices performed so badly? So Andrew, thanks, thanks for the question on that. I mean, we see this as a general market sell-off of renewable themes and energy transition themes, which was part of a much larger market sell-off of earlier stage growth businesses in 2022, and particularly in 2023. And what's driven that is the rise in interest rates, and you know, a consequence of investors more broadly to go risk off, and look for more, if you like, more defensive type investments.
You know, it's difficult to call a bottom on these things, but to us, the listed hydrogen sector looks, if I could say, quite oversold. And certainly our share price, which is trading at about half the fundamental value of the fund, obviously, that's a difficult experience for our investors. But for new investors, frankly, that is an interesting entry point into the hydrogen sector.
Robert says, "Portfolio stage, early to growth, 39.4%, assume balance is cash." It's, well, it's cash and listed companies, as we said in the presentation, yeah, GBP 7 million in sort of cash and cash equivalents. So that's great for us. It gives us confidence going forward.
There's a question from Will around the capital requirements of Gen2 Energy and HH2E, and how we fund those projects, and if we don't fund them, then what, what, what will we do? So just to recalibrate everybody, Gen2 Energy and HH2E are project developer businesses, who are designing and planning to build green hydrogen facilities in Norway and in Germany. We've invested on behalf of our shareholders in the topcos, so in the holding companies. And then each of those businesses are setting up special purpose vehicles to attract much larger quantum of capital to actually build the projects when they reach the final investment decision.
Now, if we're funded, and those opportunities rank well in terms of the returns criteria, then we would have the right to invest in those projects, and if we were funded, we may well do that. The flip side is if we're not funded, or the projects don't meet our returns criteria, then we're not required to make those investments, and we'll simply, our shareholders will simply enjoy the carry from those projects that flows back into those topcos. So in a lot of ways, Will, this is a free option for our shareholders at this point.
I think as we said at the beginning, the whole value of those projects under IPEV guidelines, we cannot reflect that in our NAV until they get to FID, and we're getting close to FID going forward on both projects. So to that theme, have you considered raising debt to ease the capital shortage? It's a good question, Ivan. Yeah, yeah, well, only in terms of sort of a revolving credit facility to manage, you know, smaller injections of capital into the existing portfolio for those companies to really use as working capital... we're very wary of debt as a significant instrument on the fund, and we would never do that.
I think we're restricted on how much we can go anyway into debt, but, yes, we're looking into it at the moment, but we, we haven't currently committed to any debt facilities, so we're currently debt-free.
Okay, we're maybe getting towards the end-
Toward the end.
-of our questions here. On cost, yeah, okay. Should we pass it back?
Fun, fun question.
So there's quite a detailed engineering question from AR.Z around electricity costs for the use of green hydrogen as a fuel or gas turbine. I wonder, you'll find an email for us on our website. Delighted to answer that question, but perhaps if you could drop us an email and we could get-
I can answer that for the-
Get more into it.
For the, it's the two projects that you're referring to. The Norwegian project for Gen2, electricity cost is about EUR 36 per MWh. And you might say, "Crikey, that's low." Well, it is because it's coming from hydropower, and there's a further CO2 subsidy from the Norwegian government that ultimately affects the total hydrogen production cost, which is well below EUR 5 p er kilo.
There's a question from David J. David, thanks. It's what do you expect the profitability of our holdings to be across 2024? David, thanks for the question. If you don't mind, we'll bring that back. That is an interesting point, which we will certainly try to answer in our annual report cycle. Okay. What are your favored subsectors for the hydrogen industry for new investments?
As and when you have funds.
As and when you have funds.
Yeah.
I mean, we have taken a view, if you look at our largest holdings in terms of NAV, electrolysis and fuel cell, and we do see those as really critical high-tech components with a lot of IP and a lot of market growth, a lot of pricing power. So these are businesses like Elcogen, like Sunfire, like HiiROC, like Bramble. And you know, we continue to see those as interesting places to be in this industry. Over time, 2024, 2025, 2026, the major growth in capital deployed in hydrogen is gonna be in the projects.
So it's constructing those green hydrogen facilities that use those electrolysis and, to some extent, fuel cell, and obviously all the construction costs around that. So that is the view that we took at the IPO, and I think in a lot of ways, that view hasn't changed.
Okay, there's one or two there that just repeats of earlier questions. So I think we're there on the Q&A. Thank you very much for that. Anything further, please, contact us by email and we'll address that. But can we hand it back to,
Perfect.
Mr. Meek.
Perfect, Richard, JJ, thank you very much indeed for being so generous of your time then addressing all of those questions that came in from investors. And of course, as you rightly say, we'll be able to give you back any further questions that do come through, immediately after the presentation has ended, just for you to review to then add any additional responses, of course, where it's appropriate to do so. But Richard, 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'd be great.
Yes. Look, thanks, everybody, for coming onto the session here. And thanks for following us and staying with us through 2023. We're really looking forward to developing the portfolio further in 2024. We hope to see a number of exits from the portfolio. It certainly appears that way, from where we're looking at within the shareholder register of these companies. We think hydrogen is really going to move quickly ahead in 2024, and this is the best way for you to access that through the platform of Hydrogen One. So thanks very much, everybody, and look forward to seeing you again soon.
Perfect, Richard. That's great, and thank you once again for updating investors this afternoon. Could I please ask investors not to close this session, as you'll now be automatically redirected, for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of HydrogenOne Capital Growth plc, we would like to thank you for attending today's presentation. That now concludes today's session, so good afternoon to you all.