Good morning ladies and gentlemen. Welcome to the HydrogenOne Capital Growth plc annual results investor presentation. Throughout this recorded presentation, investors will be in listen in only mode. Questions are encouraged and can be submitted at any time using the Q&A tab just situated on the right-hand corner of your screen. Simply type in your questions at any time and press send. The company may not be in a position, given the attendance on today's call, to answer every question received during the meeting itself. However, the company will review all questions and will publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and if you would give that your kind attention, I'm sure the company would be most grateful. Now I'd like to hand over to Chris Laing from FTI. Good morning, Chris.
Thank you, Mark. Good morning everyone. Thank you for joining us for Hydrogen One's full year 2022 financial results presentation. My name is Christopher Laing. I'm a director here at FTI Consulting. I'm here with Richard Hulf and JJ Traynor, the principals of Hydrogen One's investment advisor, who will take you through the presentation today. As Mark said, we have a Q&A session after the presentation where we will be taking online questions from the webinar audience. The question portal is now open and will be open throughout. Any questions we can't get to, we will respond on the investor meet company platform. I'll now hand over to JJ and Richard.
Good morning. Welcome to our full year 2022 results presentation. I'm JJ Traynor, joined by Richard Hulf here, we're gonna tell you what we're doing to add value for investors in this exciting and very dynamic sector. Firstly, the disclaimer statement. Here's the agenda for the call. I'm gonna take you through the results, the valuation process, and give you an update on the ESG side. I'll hand over to Richard, who's gonna talk to you about the portfolio, including new financial information on the value drivers of that portfolio. First of all, the highlights for the year. Really pleased to see the NAV rising 22% to GBP 125 billion. NAV per share up 1.6% year-over-year. Portfolio continued to deliver strong growth.
The private portfolio revenues are up 110% year-over-year to GBP 33 million. Investments for the year, these totaled GBP 54 million in six companies with a further GBP 7 million invested so far in 2023 in a new position and some follow-ons. In terms of valuation, we use the IPEV guidelines for these numbers with a 12.9% discount rate for their last update. Our holding values for the private portfolio are at a 40% discount to listed hydrogen names. That's a good place to be, a prudent place to be on private valuations and it leaves plenty of valuation upside for our investors with eventual exits through IPO or trade sale.
Lastly on this slide, we've implemented SFDR Article 9 for the fund, which is the highest bar for ESG standards out there today. That's important set for us, of course for our investors. A summary of the fund, private assets dominate here. 97% of the portfolio is private with a small allocation to listed names at 3% and reducing as we continue to invest in those private positions. Where do we invest? Revenue generating supply chain companies and developer companies with firm plans for production and financial performance in the middle of this decade. We co-invest with strategic industrials and other institutions. We've got some big names alongside us on these investments. We look for portfolio diversity.
It means global allocation right across the value chain. Of course, we want to see investments with a clear exit strategy in a reasonable timeframe, either by IPO or by trade sale. Turning to the financial highlights for the year, the numbers in a bit more detail. NAV growth for the year was driven by improving valuations in multiple private positions, and we're really seeing the benefit of our diversified portfolio approach here. All of this is very much underpinned by a strong macro and an improving macro position in the hydrogen industry, driven by three big themes, climate change mitigation, clean air, the drive for clean air, and energy security. Policy development in hydrogen has been very supportive over the last year, especially in the U.S.A. with the Inflation Reduction Act and in the E.U.
There are some slides on the macro in the appendix to this deck, and delighted to take a Q&A on that, at the end of the presentation. This slide shows the NAV movements, on the left-hand side there, the NAV movements in 2022 versus 2021 on a pence per share basis. Bottom line increase of 1.6% to GBP 0.973 per share with increased portfolio, increased portfolio value of privates, fund raised proceeds more than offsetting fund expenses. We saw improved valuations in multiple private positions totaling GBP 0.067 per share or 8%, at the end of 2022 NAV and offsetting, weaker prices in the listed hydrogen companies.
On the longer term basis, on the right-hand side of the chart, our NAV per share has been steady and rising since the mid 2020, 2021 IPO, despite the market volatility around us. This chart breaks down the NAV, the NAV growth in much more detail on a company by company basis. This is the whole HydrogenOne private portfolio. I'm looking to give our investors a very high level of transparency here on our valuations. You can see increased valuations right across the board as a result of growth delivery and despite the negative effect of an increased discount rate across the year. Discount rate increase in 2022 reduced our NAV by just under GBP 5 million, which is absorbed of course, in all of these, all of these numbers.
Let me make some comments on the investment process and then the valuation process. In terms of investment process, this is a specialist team, a sector specific platform. We take a very rigorous bottom-up approach for selecting investments driven by fundamental value, very NAV based. A lot of emphasis on management quality, you know, the quality of the teams, and of course, site visits are a very important part of all of this. I think bottom line here, the investment process is working well, that the board, the AFIM, and the investment advisor are all very much up to speed on the sector and our mandate. We've invested in six new private companies in 2022. Fuel cell innovators, developer companies, flight innovation, and hydrogen pipeline company.
In total, this represents GBP 54 million of investment in 2022 in Germany, in the U.K., in Netherlands, and in Norway. Diversity of portfolio, diversity of geographies there. This chart shows the sequence of investments during last year. Five of these were made in the first half of 2022, roughly one per month, which is a busy time for us. 2-3 months of due diligence and negotiations behind each of those transactions, of course. Our transaction rates slowed down in the second half of the year as you expect with the market slowdown and the capital resources of the fund. Let me make some comments on the valuation process that we're following.
I think we fully understand that the listed funds have come under scrutiny from investors regarding the valuation of invested private portfolios. Let me talk to you about how we're doing this here at HydrogenOne. The company applies a consistent approach and a very rigorous approach to portfolio valuation centered on discounted cash flows and using the IPEV guidelines. The valuation of the entire private portfolio is reviewed and approved by the board on a quarterly basis, and it's reviewed by the company's auditors, KPMG, on an annual basis. The private portfolio is valued either using the DCF method or a combination of DCF and the price of recent investment, the so-called PORI. DCF valuations are also benchmarked against the listed peer group during our valuation process.
The portfolio average discount rate at the end of 2022 was 12.9%, which was an increase compared to 12.5% at the end of 2021. These are high discount rates. Overall, this is a detailed, robust and challenging process which we think should give our investors confidence in the numbers that we're disclosing here. The chart on the left on this slide shows the valuation basis for the different elements of the portfolio. On the private investments, when we start with a new investment, this is held at PORI, price of recent investment. We align that over time with the fundamental DCF valuation, which is typically a higher value. You can see that over 80% of the portfolio is currently being migrated from PORI to DCF in this way.
We think this is a very prudent approach to our carrying values. Let me also say that when we invest in private positions, we do bake in downside protections for our investors, such as liquidation preference, such as milestones with penalties. We don't expect to have to use these downside protections, but they're very much there for the benefit of our shareholders. When you put all of this together, the portfolio construction, the valuation methodology, the results, the checks and balances on stewardship, all of this results in a NAV per share on the chart. The gray line on the chart on the left-hand side there. A NAV per share that's steady and rising against the backdrop of weak and volatile markets.
We've built a diversified hydrogen fund here that has substantially outperformed the listed hydrogen index, the top slide on the left-hand side. As a further calibration point, on the right-hand side of the chart, we've looked at the revenue multiples of the listed hydrogen sector and compared these to our private holdings. The outcome of that is that our private holdings are at a 40% discount to the listed market, which is a good place to be on valuation. We think that's a very robust place to be on valuation and it leaves plenty of upside for our investors as we ultimately exit these positions through IPOs and trade sales. Before I hand you over to Richard on portfolio, let me just update on the ESG policy and implementation.
A key focus for us in 2022 was the classification of the fund as an SFDR Article 9 fund, which is the highest benchmark out there for ESG. We, the investment advisor, also became a PRI signatory during 2022. 2022 is our first reporting in alignment with SFDR 9 and the draft ISSB frameworks. There's a lot of information in the annual report that's out this morning. I would recommend that you have a look at that. Fundamentally, HydrogenOne makes investments to avoid greenhouse gas emissions, displacing fossil fuels in industry and the energy sector. Here's a dashboard of our ESG delivery in 2022. This is all set out in the annual report in some detail.
43,000 tons of avoided GHGs last year, 50,000 tons since IPO. On social performance, the private portfolio is employing just over 1,000 people now, and that number's rising. Strong on governance. We're on all the boards of our invested private positions. We attend all the board meetings. We made 28 site visits during 2022. We've rolled out SFDR 9 and PAI reporting right across the underlying portfolio. Here's a quick example, a case study of avoided GHG emissions. This is a Germany electrolyzer company called Sunfire, which Richard will talk to you about in a moment. The graphic there on the right, that's a 10MW alkaline electrolysis unit. That unit lifetime avoided GHG emission of 184,000 tons for CO2 equivalent.
Our share of that, Equity share of about 31,000 tons of avoided GHGs in 2022. Putting ESG all together, new standards for the fund, Article 9, 43,000 tons of avoided GHGs. The fund is Paris-Aligned and it's carbon neutral. With that, Richard, over to you.
Okay. Thanks, JJ. We'd like to unpack the portfolio for you now and review the various elements by looking at the percentage split by theme, key news flow, showing materiality of the funds, revenue growth. We'll look at projects and project insights, the future pipeline, and then a final conclusion. The fund is distinctive and unique. Unique because it's pure hydrogen. We only invest into hydrogen companies and projects, and that's why it's distinctive because unlike other hydrogen funds, we're across the value chain. If you look at the first sort of donut on the left-hand side, most of the companies in the fund are in the supply chain, in that light blue.
These are companies making electrolyzers, fuel cells and thermal plasma electrolysis, followed by storage and distribution. These are companies manufacturing compressed hydrogen devices and pipelines. The center chart is showing the European focus of the fund. Even the UK domiciled businesses are selling their product mostly into Europe and globally beyond the UK. The third table is showing the higher NAV weighting, which is an expansion of a chart that JJ showed us earlier, showing the larger developed companies like Sunfire and Elcogen being at the top. We wanted to talk to you about the materiality in the fund and show you what's going on in some of these companies. This is real, scaled up business.
We've invested into advanced manufacturing businesses in Europe. We wanted to show you what some of these businesses are doing. On the left-hand side, you can see Strohm. We've invested EUR 10 million in Strohm in August 2022, alongside existing investors like Shell, Chevron and Evonik. In the first closes of funding round that totaled EUR 14 million. This went into tripling the production capacity of Strohm TCP pipes, and these are going into the offshore hydrogen sector that you can see in that picture on the left there. On the right-hand side, is a picture from Sunfire's electroplating facility. In Germany, Sunfire manufactures its own alkaline and solid oxide electrolyzers, and it acquired this electroplating facility from the specialist NTV in January 2022.
It went on to invest another EUR 30 million at the Solingen site. You can see that there, with the plating of some of those engineered products. With growing value, we wanted to talk about where that's happening inside the fund and where we get this 10%-15% NAV growth target. The value most likely to be generated in the portfolio is through step change events, as well as regular revenues and earnings growth. By these sort of catalysts, this is new fundraising, high valuations, M&A in the sector, and acquisitions and IPOs and ultimately the exits. That whole valuation growth number is based on the steady revenue and earnings growth, plus the exits from these businesses.
Our portfolio of companies range from early stage. This is like on the left-hand side, 2024, projected numbers. Early stage businesses of less than GBP 20 million, and that's about 22% of the portfolio. In the two colors, down below that, the mid-stage, GBP 20 million-GBP 60 million, revenue businesses. That's about 45% of the portfolio in 2024. Late stage at greater than GBP 60 million, the remaining third, on the left-hand side. In terms of where most like most of the revenue growth in 2022 came from, that's the mid-stage businesses, shown in the table, on the right-hand side there. The exits are most likely to come from the late stage businesses.
There's always the chance that the IP in some of these businesses could be acquired before that. The point is the growing value of the fund are in these exit events that we'll start to see over the next two or three years. Let's talk about measuring growth. The portfolio is growing. As JJ said, over 80% of the companies are revenue generating. When you combine the portfolio and look at the historic and future revenue growth, as shown on the chart on the left-hand side, it indicates a 21x revenue growth multiple from 2021 to 2024. That's a compounded average growth rate of 174%. Where is this coming from? Shown in the chart on the right-hand side.
When we add together the individual revenues projected for each company in 2024, our share, most of this is you can see is coming in storage and distribution. That's businesses like Strohm and NanoSUN. What sort of track record of revenue growth have we seen so far, even though we spent most of 2022 investing into these companies? The revenue growth for the whole portfolio since investment, that is shown in this chart here. You can see the earlier companies on the top right-hand side, there's 10%-15% growth in revenues from that group showing Bramble, Sunfire, et cetera. Then the most recent investments, Strohm, Elcogen, and Cranfield, have grown 1x- 4x revenues since we've invested. These have got great potential.
We've only just invested into them this year in 2022. The project developers, Gen2, and HH2E, the special cases is these projects will be substantial revenue generators from around 2025, but more of that a bit later. Let's look at an example of one of those companies there, Sunfire. So we can see from the chart on the right-hand side there, Sunfire delivering a 10x revenue multiple since our investment. That's about a year and a half ago. Fairly modest valuation upgrade, as shown in the bars below that, up to GBP 21.8 million. That's because we're in the investment phase of this business. They're starting to build factories. We showed you the electroplating facility a little bit earlier.
Some decent co-investors joined us in 2022, Copenhagen Infrastructure Partners and Amazon, and there will be others to follow. Sunfire's a well-established business, making grid-scale electrolyzers for customers like RWE and Uniper. They have 3 factories, Germany and Switzerland, over 500 staff, and also contract out manufacturing, announcing a manufacturing joint venture with Vitesco Technologies just at the end of the last quarter. This is alkaline solid oxide technology, and they delivered their first of these to RWE in the last quarter of 2022. Let's talk about those project developers that we mentioned. That's HH2E and Gen2 that we'll come onto in a moment.
The fund invested GBP 5 million into HH2E in 2022, 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 of Western Germany. The Thierbach is the first project that was announced, and that's one of five coming along. HydrogenOne has taken up its 15% investment rights into the project, with partner Foresight holding the remaining 85%. We recently announced a EUR 30 million gross spend on land and front-end engineering design for the development of a first 100 MW green hydrogen and energy storage project. Bear in mind the value of these projects is not yet reflected in the NAV of the fund.
That will do that when, as these projects start to come on stream. We made great progress in the first stages of our two project developers in 2022 after investing into HH2E in May and Gen2 in Norway in March 2022. Through our 7% holding in Gen2 and our 10.7% holding in HH2E. This will give us 1,280 megawatts of green hydrogen potential in Norway and 900 megawatts in Germany. We have the right, but not the obligation, to invest up to 300 or just over GBP 300 million in these projects over the next 5 years, and we hold board seats on both companies.
This is great upside for the fund not yet reflected in what we're doing. I'd just like to close out by saying there's more to come in the fund just before we get to the last slide. Our investments in 2022 came from an active portfolio of companies and projects sourced from our own unique network of companies and contacts. We continue to work with Arup and RDD and deal sourcing partners. We're starting to see more investment banks coming into the market now as companies and projects really start to scale up. Just a reminder of what we're doing. On the left-hand side, investing across value chains, supply to application.
The thesis at IPO that most of the action in supply chains and supply projects would dominate the fund, and that's still the case. In terms of the pipeline, that's GBP 23 billion investable universe in private companies and projects. That's about 5% of the world opportunity set in 200 positions, and we're monitoring that. We distill that down to GBP 500 million in the pipeline of 34 positions, and then down to just over GBP 100 million, which is the active pipeline that we're looking at today. We're conducting outside due diligence from technical and legal perspective. The board is reviewing these projects and we're preparing to execute. We've got the capacity and opportunity to continue executing GBP 200 million worth of deals per year.
Our target is to grow the fund to GBP 500 million in the next 2 years. That's the pipeline. If I can just close out now, and then we'll take questions afterwards. I just wanted to finish up by saying we continue to invest into the best hydrogen companies and projects through our own unique network. We've got great targeting management teams, the best in the business, established businesses with revenue generation, projects with demand and hydrogen offtake. Hydrogen, of course, means avoided greenhouse gas emissions. This all adds up to a profitable investment generating very decent return. To do that, we use our specialist team. We're actively involved at board level and project level in everything that we're looking at. We've got first-mover advantage to identify profitable opportunities and a massive pipeline beyond that.
I'd like to close out the presentation there and switch over to Q&A, please.
Great. Thank you, Richard and JJ. We'll now go to the Q&A portion of the webinar. As a reminder, we are taking questions from the viewers, so please type your questions into the question portal. We've had a number of pre-submitted questions on the share price and its recent movements. Would you care to comment?
Yes, sure. We of course, spent most of 2022, focusing on investing into these companies, and now we're just starting to see the revenue growth from these businesses. Just updating that now. I think we need to start concentrating now on giving the market better visibility of what's going on, and hopefully we've started to do that here, rather than leave the market to figure out what they think is going on in the hydrogen sector. I think it's just that we've got to be smarter at keeping the market aware, and quantifying the real growth in these businesses.
I think as investors start to see activity in the market, M&A, larger companies coming in to acquire the assets in the portfolio, people will start to get reassured that the hydrogen business is really here to stay.
Great. Thank you. Now more of a macro question. What do you make of recent hydrogen investment plans and policies in the UK, particularly post-Green Deal, the IRA in the US, and Europe's response as well?
Let me have a go at that. The headline grabbing stuff has been the U.S. Inflation Reduction Act and the E.U. response to that, actually building on very robust policies that were already in place in the EU. We think fundamentally around the world, the U.S.A., the E.U., and the Far East, particularly Japan, South Korea, those are the leading areas in terms of policy formation. Keep an eye on the U.K. There is a steady drumbeat of progress in this country. There is a hydrogen fund package available, GBP 240 million.
There's a very, I think, a very well thought through process to allocate that funding, with announcements at the end of March, around 20 shortlisted projects, green hydrogen projects, blue hydrogen projects, that are now on a runway, to be selected for funding around the end of this year. Those 20 projects, headline that 400MW of capacity in their phase 1. Globally, U.S. and particularly Europe, but keep an eye on the U.K. There is a steady drumbeat here, and things are turning positive.
Great. Thank you. Some questions on company fundraising coming through. Can you please explain why the company is currently unable to raise funds through the issuance of new shares? Is that driven by policy or sentiment?
That's actually a very straightforward answer. In our prospectus, we set out that we would not raise funds through equity when the share price is below the net asset value. That's actually very standard for investment trusts. Many investment trusts around us, including Hydrogen One, are currently trading at a discount to NAV. I think that's the answer to the question.
Okay. Are there any plans for share buybacks of HydrogenOne plc, given that their shares are currently trading at such a heavy discount?
Well, I think that's really one for the board of directors. I think everything's on the table. You know, in terms of the cash availability and the fund, you know, that would limit our ability to put in a meaningful share buyback at this point.
Well, bear in mind, we're quite a small fund at the moment. We're mostly invested into private situations, it's quite difficult for us to liquidate. Yeah, you have to bear that in mind.
Okay. You have touched upon the EV sales multiple implicit in your valuation and how it compares to EV sales multiple of listed hydrogen plays. Are the revenue recognition policies comparable, or are there a wide dispersion in revenue recognition policies?
I mean, these are the numbers that are. Just to explain, EV to revenue multiple is the valuation compared to the revenue for each particular business. What we calculate is that the private portfolio we're holding is on a 40% discount to the listed revenue multiples on that basis. These numbers are provided to us by the companies that we've invested in, the companies we look at in the market, and those companies have their audit processes that we're very comfortable with.
Great. Thank you. We've still got a few more questions here about your portfolios. What is the current split of portfolio value, blue hydrogen and green hydrogen projects and businesses?
Let me take that one. It's all green. There is no blue. Blue is interesting, but green is even more interesting. The two project companies that we talked about, HH2E, in Germany and Gen2, in Norway, they're all pure green projects. We don't really see many blue projects that are as attractive as the green, so we'll continue to invest into green.
Great. A further question here. How are your private investments faring in today's environment where pre-revenue growth companies are finding it harder to fundraise, with many having to resort to SAFEs or even writing down valuations? Will Hydrogen One participate in any of the follow-ons that private companies are seeking?
There's quite a lot in that question. I think the first thing to say is that all of the companies are revenue generating. We'd rather push back on pre-revenue. The exception to that is the developer businesses, which will be revenue generating from the middle of the decade as their projects come on stream. I think the second part of the question was, would we participate in exotic things like SAFEs? We wouldn't rule that out. We have looked at opportunities that do use SAFE. I think frankly, we didn't get their own valuation. We would think of it in, from a valuation perspective rather than the instrument. In terms of follow-on, we've done some follow-on this year.
That is part of our business model. We'll just be very NAV driven and very pragmatic as those opportunities present themselves. I think in general, we're seeing a quite attractive funding environment for these private businesses. You know, and I think, you know, keep an eye particularly, you know, in the supply chains. There are some significant funding packages coming through there from private equity into those names.
Can I just add to that? I mean, it is a tough environment. You know, your question is quite smart to pick that out. The hydrogen sector that we see is the industrial hydrogen sector that most investors will not see. As JJ says, it's a very active market. There is a lot more investment banking activity. We're seeing Rothschild, ABN AMRO, our own bank, Barclays, coming in to work on deals. It's quite competitive actually. Yeah, there are supply chain issues. All that's factored into our modeling. But it's a very healthy hydrogen market.
Okay. We're getting some really great questions coming through. Further one here about your holding period for late-stage companies. Is your approach the same for both public and private companies, i.e., will you hold late-stage private companies for longer than public, so giving investors access to late-stage private companies and hydrogen-linked infrastructure via HyGen? Will Hydrogen One become a small cap incubator or infrastructure fund?
Let me pick that up. You might want to add to that. We are not an incubator fund. We are looking to scale up already revenue-generating businesses. That's important. The holding time for these companies, it was mentioned in one of the slides. It's maximum of sort of 3-5 years. We may even see some exits over the next year or two. It's a very distinctive and different portfolio to the listed fund. The listed part of the fund is tiny. That gives us corporate access to understand what's going on in the hydrogen market. The real focus is really on private.
Okay. Great. Some questions back to company fundraising. What are the potential alternatives that would enable the company to finance additional investments?
Let me have a go. I mean, the setup of an investment trust is to raise fresh capital through the share price. I think we mentioned today because we're trading below the NAV, in line with many investment trusts actually, that market is not currently open to us. We would see this is the route to raise funds over time.
Okay, great.
I suppose you could also say that the investment trust typically, often have a revolving credit facility, so they have a short-term debt facility. That tends to be more in infrastructure type investment trusts. As we grow in infrastructure over time, that's something which we might well look at.
I suppose-
I think actually one of the previous questions in that quite long question about portfolio was around infra. Look over time, I mean, to answer that question, as we grow the developer companies through those projects that Richard's outlined, we would expect to see a growing proportion of our capital in those more infra-like projects.
Tied to that, I guess, looking forward in the near term, are there any significant milestones within the portfolio that would lead to significant upward revaluations such as completion of certain projects or beginning of operations?
Well, there are. I'm afraid we're rather limited in what we can say because these would be, I think by definition, inside information which would need to be put out on RNS at that appropriate time. Yes, I mean, we are, you know, we're active board members in all of these positions and we've made this very much, you know, high on the list of things to do in those invested companies. The answer to that question is watch this space.
I mean, the sort of things that are gonna happen are FID, final investment decision on some of the projects. Some potential mergers from businesses that we know that there is a long list of much larger investors waiting to come into the next funding round of these businesses, this year. Yeah, those are the sort of catalysts that we're seeing coming along. Yeah, we can't be too specific, I'm afraid.
Okay, great.
We've seen a lot of news in recent months around ammonia development, around the world. A question here, hydrogen and ammonia seem to be moving forward hand in hand. Will HydrogenOne ever invest in companies specializing in ammonia?
Ammonia, just to calibrate everybody, is a derivative of hydrogen. The ammonia industry is a big industry. Chemicals, fertilizers, and it's a commodity that's traded widely around the world. One of the technical challenges for the hydrogen sector is long distance transport of the hydrogen from its source to its customer. You know, to. You can liquefy hydrogen in the same way as you can liquefy natural gas, but the temperature you need to reach to liquefy hydrogen is actually very low compared to the natural gas industry. If the hydrogen is converted into ammonia, the liquefaction point is higher, making it a lower cost operation to transport it. That's one piece.
The second piece is that hydrogen as clean hydrogen, as clean ammonia can be used as a fuel. There are a number of shipping companies, Maersk I think have been quite public on this, you know, exploring the potential to use clean hydrogen into clean ammonia for fuel in ships. Obviously, talk about GHG. It is a very interesting emerging area. Today, we've not invested anything in that space, but it would be very firmly in scope for the fund and let's see where we go.
Great. Thank you. Further question. Do you have a sense of the scale of dry powder in the market looking to invest in companies in hydrogen space now compared to time of IPO?
That's a giant question. I mean, we see in terms of hydrogen projects around the world, there's a capital markets opportunity of at least $500 billion over the next 10 years. Maybe as high as $700 billion. That financing is required simply to replace the gray hydrogen sector. The gray hydrogen market is the hydrogen sector that exists today that's hydrogen manufactured from fossil fuels. There's a big imperative to clean that up and those $500 billion-$700 billion figures are, you know, what are required to simply do that.
We think there's a lot of potential here for the capital markets to get involved and we see some significant investors that are looking very closely in this sector. There's a good case study in the portfolio actually, with Sunfire was the first investment that we made shortly after the IPO. And since then, you've had funds like Hy24, Carbon Investment Partners, raising billions to invest into the hydrogen market globally. And indeed, following our investment into Sunfire, we had the CIP funds and Jeff Bezos Amazon fund following on to invest into us.
We expect to see more of that sort of thing as the world wakes up to the huge opportunity in these companies, where there's first mover advantage, particularly the technology these companies are pioneering. Yeah, we've really seen a ramp-up in the interest in the sector.
Great. Thank you. Got a final question here. You mentioned investment banks are now looking at the market. Can you comment which sector of the market they're looking at specifically, production, supply chain, storage?
Possibly a question for an investment banker. I think just to add one more to Richard's answer on the previous question. I mean, INEOS Energy was an early mover into this sector and they, of course, backed our fund with GBP 25 million at IPO. They are now one of a number of industrials that are moving into hydrogen in a significant way in terms of capital. Look, in terms of investment banking, I mean, I think it's probably best to take that one back to the banks. You know, basically the banks get involved in raising finance for companies at the equity level and they offer their services to the companies to make that happen.
I think increasingly we're seeing banking interest around project finance and provision of debt into projects. We do believe that the green hydrogen projects that we're involved with in Germany and in Norway are bankable. We would expect to see debt coming in around the time of the first production from those projects.
Great. Thank you both. I'm afraid that's all we've got time for today, but as we've said, we will come back to any questions sent through on the platform, later this week. That concludes today's presentation. I'll hand over to Richard and JJ for any closing remarks.
Yeah. Thanks very much. Well, hopefully we're starting to clear up concern in the market about what's going on in the hydrogen sector. Is it real? Are these companies generating revenues? Is there capital moving into the space? Was this a false start? Definitely, it's a growing sector. There's real materiality. There are real players coming in, we're gonna continue to keep the market abreast and updated of the real scale that's growing inside HydrogenOne Capital. Thanks very much for joining us today.
Great. Thank you.
That's great. JJ, Richard, thank you very much indeed for updating investors this morning. Can I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This may take a few moments to complete, but I'm sure it'll be warmly welcomed by the company. On behalf of the management team of HydrogenOne Capital Growth, we'd like to thank you for attending today's presentation. That now concludes today's session, and good morning to you all.