Good afternoon and welcome to the HydrogenOne Capital Growth plc interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted any time via the Q&A tab situated in the right-hand corner of your screen. Just click Q&A, type in your question and press send. The company may not be in a position to answer every question received during the meeting itself, however, the company reviews all questions submitted today and publishes responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Simon Lewis, Vice Chair, EMEA, FTI Consulting. Good afternoon.
Thank you, Paul, and good afternoon everyone, and thank you for joining us for HydrogenOne's half year results presentation. I'm indeed Simon Lewis, Vice Chair, EMEA at FTI Consulting. We are HydrogenOne's financial communications advisors. I'm joined by Richard Helf and Dr. JJ Traynor, the principals of HydrogenOne's investment advisor who will take you through the results presentation. We have up to an hour in total, so we'll have a Q&A session after the presentation in which we'll be taking online questions from you, the audience. The question portal is now open and will be open throughout. As Paul has said, any questions we can't get to during the presentation, we will come back to the questioners afterwards with an answer. I will now hand over to Richard and JJ to take us through the presentation.
Great, Simon. Thanks very much. Good to be here this afternoon to talk to everybody about our results. I'm actually not in the same facility as Richard and Simon. I'm in the Netherlands, attending a board meeting of one of the companies that we've invested in on behalf of our shareholders. Interesting to be here for this call. Let me take you through where we are with the fund, and our perception of the hydrogen sector, and then I'll pass over to Richard who will go through the investments that we've made with shareholder funds so far this year. HydrogenOne was launched in mid-2021. We have GBP 128 million of assets under management backed by you, our shareholders.
Thanks for that. Backed by INEOS Energy and supported by Arup who act as the technical advisor for the fund and are particularly engaged with us on due diligence. The purpose of the fund is to provide investors access to private equity in the clean hydrogen sector. Over time, we expect over 90% of this fund to be involved in private sector companies and privately held projects. The fund's running well. We've deployed just over GBP 100 million so far in nine private companies with a small allocation to listed positions, all of that in low carbon businesses with a GBP 46 million deployment in the first half of 2022.
Where we stand today is around 80% of the fund has been deployed within the first 12 months of the life of HydrogenOne. Next slide, please. All of this of course fits very strongly into an ESG investment case. This is an impact fund investing in clean hydrogen for a climate positive impact. Deploying capital into air quality themes, energy transition themes, and all of that really is the overarching investment case for HydrogenOne. We have deployed GBP 103 million so far into low carbon growth.
We sit on the boards of all of the private companies that we've invested in, and that helps us to drive the governance that we all expect and to drive the ESG standards that we're all looking for. Ultimately, HydrogenOne's investments are all about avoiding greenhouse gas emissions, displacing fossil fuels from the traditional heartlands of fossil fuels. Those avoided greenhouse gas emissions are a metric that we intend to report out on, going forward, for this fund. Turning to the highlights, for the first half, we continue to see improving macro fundamentals in this very strongly growing sector, underpinned by government policies all around energy transition or around clean air and, of course, around energy security.
The NAV, the net asset value increased by 21% in the half, including the April 2022 fundraise. NAV per share increased by 1.1%, and that figure includes a 3% increase in private equity valuations, which was good to see. We made five investments in the first half of 2022, totaling GBP 46 million. On the next slide you can see a waterfall chart that explains those movements in a bit more detail compared to the end of 2021 on a NAV per share basis. At the bottom line here, NAV per share increased by 1.1 % per share. Coincidentally, that's a 1.1% increase in NAV per share.
Within that, listed share prices were relatively weak in the period, with clean hydrogen shares falling broadly in line with the fall off in the NASDAQ over that period. More than offsetting that effect, we saw improved valuations in the private equity portfolio in HydrogenOne, improved valuations in multiple positions with an aggregate increase of 3.9 per share or 3%. It's really good to see the growth coming through at that early stage in the investments that we made on behalf of our investors.
Our share price, which is the solid blue line on this chart, is broadly unchanged since the middle of last year with a rally in the aftermath of our IPO. We're currently trading around our NAV, slight 2%-4% discount to the NAV. That's really in sharp contrast to the performance of the listed hydrogen markets, which we track with the Solactive index, the gray line you see on this chart, which as I said, has been caught up in the tech sector sell-off, and of course with the headwinds of the interest rate cycle and the rising interest rate environment.
I think overall here, what you're seeing is the benefit of our diversified portfolio and private equity approach, which is reducing the volatility in this sector on behalf of our investors. Some comments on the macro momentum, and we're seeing very strong momentum here in clean hydrogen, as I said, driven by climate change, driven by air quality, and driven by energy security. All three of those themes are very much coming into play here. Very strong government support now in many regions. Real and lasting with significant financial backing in many cases.
Here in the U.K., the targets for 2030 clean hydrogen were doubled over the summer to 10 gigawatts by 2030 with a short-term milestone of 1 GW with CFD available for companies that want to participate in that. The E.U. targets were increased by 3x to over 300 gigawatts by 2030. Again, that was a change this year. Just over the summer, the U.S. entering the clean hydrogen sector in a very powerful way with the Inflation Reduction Act, which includes tax incentives for green hydrogen producers, which we think makes green hydrogen competitive with gray, and that's an absolute game changer in the hydrogen market globally and particularly in the United States.
All of that is against the backdrop of high fossil fuel prices and high carbon prices, which we think are here to stay and, of course, are making hydrogen more cost competitive. All of that is coming together to create a very dynamic environment now in this sector with multiple strategic investors coming into the market. Oil companies, steel producers, fertilizer manufacturers, utilities and so on. Big industrial players, many of whom we're co-investing with. More opportunities for HydrogenOne shareholders. We expect to see a 6x increase in electrolyzer sales this year to 3 GW . We expect to see fuel cell sales increasing by 80% this year.
We now have over 180 private companies on our radar compared to just 58 companies at the time of our IPO. Very strong momentum here, and I think a very positive set of developments for our investors. Just to calibrate everybody on the call, this is how green hydrogen works. On the left-hand side of the chart there, renewable electricity from wind or solar, which is then run through an electrolyzer, which splits water as a feedstock into hydrogen and oxygen. Then that hydrogen can either be used as a gas, you know, as a feedstock in things like oil refining and fertilizer manufacturing. The gas can be blended in natural gas grids and burned in power plants or domestic boilers.
The hydrogen can be stored and shipped elsewhere and then converted back into electricity using fuel cell, typically in the transport sector or portable power. All of this is emissions free. The bottom line here is this is avoided greenhouse gas emissions. Every gigawatt of green hydrogen avoids 1 million tons of greenhouse gas emissions each year. The scale here is tremendous. The size of the opportunity is huge. That's a bit on the macro. Perhaps, Richard, over to you on the fund.
Thanks, JJ. Let's get into the nuts and bolts of what's been driving the growth in the fund and what have we been investing into as at 30th of June this year. As at 30th of June, total NAV of the fund GBP 124.8 million. As JJ said at that time, we've made a few investments since. But as at 30th of June, GBP 95 million invested. The top five investments are the private companies. Elcogen's a new investment. We'll take you through that shortly. Sunfire at HiiROC were investments from last year. As well as NanoSUN and Bramble is a new investment.
When you look at the portfolio by theme, most of this has been going into supply chain, the pie chart on the left-hand side. With the three segments of storage, 12% production, and end use applications of hydrogen at 7%. In terms of where we've been investing by geography, most of that 65% has been going into the U.K., with some German and mostly European investments so far. That we expect that to change over the next year. You'll probably start to see more Asian, North American investments, but that's where the fund was at the end of June. In terms of asset class, the key thing about this fund is it's about investing into private companies and private projects.
That's really what HydrogenOne is about. Just in terms of what we've invested into in the first six months of the year. That's GBP 10 million to Bramble at the beginning of the year. We'll go into these companies in more detail in a moment. With Gen2, Cranfield, Elcogen, and HH2E. The real thing, I mean, that's almost a deal per month, so we've been pretty busy as you can see. The real criteria that we've been deploying investing into these companies is well-established businesses with a real track record of creating value already. It's not about investing into new startups. These businesses have got to be able to scale, and that's what we're already seeing.
We've got to have seasoned and experienced management teams that really know what they're doing, and that's what we've been investing into. Let's talk about a few examples. Gen2 is the first project developer that we've invested into. Run by CEO Jonas Meyer and Chairman Oscar Spieler, who was previously Golar LNG, which is very, very important part about this particular business model. This is a smaller investment of GBP 3 million into the topco, but the business owns individual projects that are in special purpose vehicles. And through our investment into the topco, we also gain investment rights into the green hydrogen projects that are in Norway.
One of the key reasons for being in the northern part of Norway is we've got very cheap, hydroelectric power to power the electrolyzers, which is really the most expensive part about investing into hydrogen. The returns will be excellent when we get to that part to generate returns for our shareholders. One of the other key things that we always look for is who are we investing with, and who are the buyers and off-takers of the technology?
The co-investors here, HYCAP, another U.K. hydrogen fund, Vitol, the energy trader, interestingly starting to move into hydrogen, and Havn Energy and Nutsen, local industry players, which give us a lot of confidence about the whole technology aspect of putting hydrogen onto into vessels and shipping them off through Europe. The other key thing about projects is we've got to be comfortable about the offtake of hydrogen at the end. There have been contracts, MOUs signed with a number of U.K. ports, German ports, U.K. energy traders, and German utilities.
That's been a really interesting investment so far, and you'll start to see more of that coming through over the next few months as we start to invest into the projects. Second project developer in Germany, HH2E CEO Andreas Schierenbeck, ex-Uniper CEO, interestingly moving into the hydrogen space. GBP 5 million invested into topco, again, with special purpose vehicles of multi megawatt projects, the first being the recent development down at the bottom there. The project, which is 200 megawatts, that we'll be investing into along with our partner in the investment, which is Foresight.
Foresight have been a small investor into topco but a major investor in the project. Just testament to the sort of quality of some of the projects that we've been investing into. Those are the two companies that are green hydrogen producers. Right at the beginning of the year though, we invested into Bramble Energy, CEO Tom Mason. This was originally a company that came out of universities, but that was a long time ago, hence the co-investors IP Group, Business Growth Fund, and others. This is now a maturing business, and the funding we put in allowed the Bramble to start to move into larger premises with factory and workshops.
One of the key reasons we invested into Bramble is because they make a fuel cell, and a number of investors will be familiar with the fuel cell being made up of steel plates. Bramble have pioneered the use of printed circuit board material, which makes them much lighter and much easier to form into different shapes. You can see an example of one of those on the right-hand side. The SDX portable power unit, which is about the size of a small suitcase, obviously is very lightweight, and it's very useful for finding market share in the portable power sector. Bramble has been a great investment for us. Elcogen, the CEO is Enn Õunpuu.
This is a business based in Tallinn in Estonia and Helsinki in Finland. We spent quite a bit of time out there doing our due diligence. Interesting business with almost like a computer factory for making the fuel cells and the plates and the actual cell part of the technology, which they're selling to companies like Convion in Finland, Genvia in France, and two Japanese makers of fuel cells, Miura and Astomatech. Very important part of the investment criteria, have these businesses got scale? Who are they selling to? Can we talk to those offtakers? That's a very important part of that business.
Recent developments, more funding coming in into the business from other investors. The key milestones you'll see for each of these investments that we've made, which are written into the shareholder agreement to make sure that these companies are motivated to achieve their target. We really think that the growth of fuel cells and electrolyzers, the core part being the cells and the plates that go into that, is a very important part of the value chain to be in, hence our GBP 20 million investment into Elcogen in May. Leading on to the last investment in the first half, Cranfield Aerospace Solutions.
Very important focus for us in venturing into this, one of the few applications is when we get into the aviation sector. We don't wanna just be investing into one-offs. We've got to have a certifiable aircraft certifiable by the CAA, and that's what we're really getting with Cranfield Aerospace Solutions. Very well connected, excellent technology, very well respected in the aviation sector. We'll be working with Cranfield Aerospace Solutions to certify the Britten-Norman Islander aircraft, which will actually become a viable product that we should be able to see market growth from. Very generous total addressable market where we can see the planes being sold into.
What we're really targeting is first commercial and certifiable test flight in 2023. One of the key things that we'll be working towards. It's an excellent company. Another interesting aspect here is also the co-investors. Safran Corporate Ventures, the French aerospace company, Tawazun Strategic Development Fund from the Middle East, and Motus Ventures. Very key part of all the investments that we've been making is who are we actually co-investing with. Those are the companies that we've been investing into. JJ, can I pass it back to you?
Great. Thanks, Richard. We've been pretty busy in the first six months of the year, and there's a lot to come. This chart talks to the pipeline that we have put together on behalf of our shareholders. An investable universe, if you like, a long list of over 200 positions, GBP 23 billion of headline value there. Big figures, but actually that's only about 5% of the total market that we see. We've taken quite an aggressive sift to get to that long list. Out of that, we're actively working a pipeline of GBP 500 million in just over 30 positions, 34 positions.
This is where we're doing site visits, management meetings, running the economics and thinking about the portfolio fit on behalf of our shareholders. Then from that GBP 500 million, we have GBP 100 million or so of live deals that are in the late stages of transaction. Currently 10 positions sitting in that category. This is where we have third parties involved with due diligence, so technical and legal and so on the due diligence side. We're engaged with our board and our investment committee and our AIFM to check the appropriateness of these investments. We'd expect to be able to transact around GBP 200 million a year of portfolio with the platform that we've put in place.
A lot to go for here. If I could just say this is quite a unique portfolio. There's not a lot of investment banking activity in this sector, and this is a portfolio that we put together really using personal networks, and something which we hold very closely confidential in the fund. Just to wrap things up and then obviously get into the questions on the last slide. It's an interesting sector, it's a complex sector, and we do think this requires a specialist approach at this stage. It's all about deploying capital at scale into energy transition and avoiding greenhouse gas emissions. Of course it's about profitability.
We have a returns target there you can see in the chart of 10%-15% per year over time. Sector outlook is positive, supported by government policies. We've deployed about 80% of the fund within a year or so of the launch. We've announced with the interims that the board is putting in place a share issuance program in order to have an easier and, you know, to facilitate fundraising as appropriate over time. Let me close by saying that this industry is growing perhaps a bit more quickly than we'd anticipated. More companies, bigger companies, more projects, bigger projects, and a fundamentally improving macro situation.
Look, Simon, with that, perhaps over to you on the Q&A.
That's fantastic. Thank you very much indeed. Ladies and gentlemen, do please continue to submit your questions. Which just while the team have a moment to review those questions submitted already. I'd just like to remind you that a copy of the presentation and also a recording, and the slides will be available to review on the Investor Meet Company platform. Simon, as you can see, we've had a number of questions through from investors today. If I may just ask you just to read out the question where appropriate to do so, and give your response, please.
Thank you, Paul, and thank you, Rich and JJ, for a really interesting presentation. It really has been a very busy and productive six months. Thank you, Paul. Just to remind everyone, do keep the questions coming in. We've already got quite a few questions, so I don't think we'll necessarily get to all of them. I've got a few to kick off with, and JJ is about to go to the airport, so we will probably lose JJ shortly. It's on business, so that's all good. We're probably gonna actually put the questions to you, Richard.
Yeah.
JJ, please, for as long as you're with us, do chip in. First question, Richard. Soaring gas prices, a renewed focus on energy security and a drive for clean air have certainly highlighted growing interest in hydrogen as an energy source. How much do you believe this will help HydrogenOne Capital?
This really underscores the original thesis of the investment from 2020 about investing into hydrogen, but also into private hydrogen. I mean, the whole recent spike in gas prices, we think, will be relatively short-lived because the activity in Ukraine has been unhelpful, but it's actually helped us because it's accelerated the move from gray hydrogen to green hydrogen. It's been very positive.
JJ, whilst we've still got you, do you want to add anything to that?
I think the dynamics are changing very quickly. When we started working on clean hydrogen two years ago now, I mean, gray hydrogen was in the $1-$2 per kilo range, and green was in the $5-$6 per kilo range, and the discussion was how to close that gap. Those lines have blurred. As Richard says, the higher natural gas price has pushed up the cost of gray hydrogen.
The tax incentives for green hydrogen have pushed those prices down, and so there's actually a convergence of those two. We see in some geographies, gray and green are actually price competitive, which is a game changer for this industry.
Next question. Share prices of listed hydrogen stocks have rallied in the current macro environment. What trends are we seeing in the private sector, Richard?
We still believe that there's real value in the private sector. In terms of where we've looked at valuations of our private companies, there's been surprises in the market that things have held up. Really we think it's a relative story because listed companies have to give reliable earnings and revenue growth to the market that's predictable. The hydrogen sector we don't think is yet ready to be fully listed.
Mm.
Hence the underperformance of some very decent listed companies just by surprising the market with news about earnings or revenues not being on target. That's why we've steered clear. Fundamentally, the value is still there, but it's just not there on a quarterly basis that stock markets tend to measure companies by, which is why the private market is a better place to be.
Got one more question, and then I'm gonna start going to the questions that have come in. How much further investment and capacity extension will be needed to meet peak demand for hydrogen in the coming years, Richard?
Well, peak demand is way off. We're not really sort of planning a scenario of spending around that. If we just look at the 90 million tonnes per annum of existing gray hydrogen, we know that the CapEx required to turn that back into green is around $500 billion. In terms of the size of the market, that's very attractive and that's why we're going after it.
Okay. I'm gonna turn to the questions that have come in. Again, just a reminder, everyone, your questions will be answered if we don't get to them. Richard, question: Are you actively involved with your investments? How is investment risk managed? And the listed element of the fund is modest in comparison. Why is this so?
Good example. JJ has just left the call because he's in a board meeting of one of our second half investments, Strohm. There you go. We are on the boards of every company that we invest into. We're very close to the companies, and we are seen by even other larger investment funds as the energy fund, the preferred partner to be investing with because of our connections and our specialization in hydrogen. Yeah. The second part of that question I didn't-
The second part, how is investment risk managed?
Yeah. That's a very good question. Well, I mean, it starts with not investing into management teams that don't have a good track record-
Mm
that we can trust when it comes to them managing our assets. We do an awful lot of due diligence.
Mm.
We bring in Arup as our technical consultants. We work very closely with Gowling, our lawyers. We look at ESG risks, specifically breaking down the environmental. That's normally quite an easy one because it's hydrogen, it's zero carbon. We spend a lot of time making sure we've got good diversification board, and that we've got control of supply chain. It's a fact of life that we've got inflation in raw materials. We've just gotta make sure the companies have got
Mm
... purchasing plans to bring that stuff in advance. We get really into the detail on those.
Next question. I think you covered this a bit in the presentation. What are the range of sizes of equity stakes you take?
Yeah. That's the first question that the... We've just come back from Hydrogen Europe. We've been talking to investors out there, and that's the first question they ask. At the moment, because of the size of the fund and the number of investments we want to make, it works out at a between EUR 5 million and EUR 25 million is what it are the ideal.
Yeah
Investment size. It's not really that big because we're looking at companies that are going into the development phase. This is not startup capital. This is growth capital.
Mm.
On the projects, we're seeing investments. I mean, the investments you saw into Gen2 and HH2E, GBP 5-7 million, but the follow-on investments into each of those companies into the actual projects will be more like GBP 100 million as those projects get much bigger. That's why the fund has got to grow and will grow.
Question, has come in. What's your approach to investments that are not performing?
Well, we have to if they're not performing, and luckily so far on the private side, but it's early days, we haven't come across serious underperformance apart from the issue around not being able to get hold of programmable logic controllers, the electronics not being able to get hold of other parts. We need to make sure the companies have taken that into account and have got an advanced purchasing program. In some cases there may be management issues. We need to nip these issues in the bud through the board to make sure these companies can address these short-term issues. So far, they've been short-term teething issues that everybody else is dealing with.
It's just making sure that you approach these issues in advance. Because we're close to the investments because of our board positions and we've got very good relationships with the other companies that we've co-invested with, we can give the companies the benefit of being able to make adjustments. With a private investment, you're in it for the long term. This is not listed company investment, you can just sell the shares at the right point. With underperforming private investments, you've got to step in and help the company do something with it yourself. Don't forget, the investment term that we're holding these investments for is between sort of two and five years.
Mm.
There is time to address. We do a lot of work at the beginning, as much as we possibly can to minimize the risk of getting into that situation where it's seriously underperformed.
Okay, thank you. We've got a question that's come in, an EU related question. REPowerEU is targeting 10 million tons of domestic renewable hydrogen production and 10 million tons of imports by 2030.
Yeah.
To what extent might you consider this too ambitious and unrealistic?
Yes
When you consider current production rates?
Yeah. When it I mean, those are big numbers. I mean, when we put out the when at the IPO, that same number was 40 + 40 MW. If you translate 20 million tons into megawatts, that's more like 300 GW. We've gone from 40-80 GW last year to 300 now. The question is that realistic to get to that number by 2030? Yes, we think it is, but you've got to look at this in two ways. You've got to look at what is the electrolyzer production capacity worth from companies in Europe, which is about 130 MW. That's not enough.
If you consider hydrogen projects themselves.
Mm
That's more like 250 gigawatts, and I'm quoting Bernstein numbers here. Yes, it's tough, but we should be able to get to that target through the combination of pure electrolyzer capacity and hydrogen generating projects.
Another question just come in, what's the realization strategy for particularly strong performing investments?
Well.
Nice question to get.
Yes. Yeah. We manage this like every fund manager should manage assets. You set a price target, and then when you get to that price target, you sell. We have price targets, which are really in terms of multiples, but they do vary from company to company. We're looking at a minimum return of 2x our investment. If we think that something has got further to run, if it IPOs, we can sell some of the shares and then keep our exposure as we go forward. We're quite strict about this. We've got price targets. They're multiples between 2x and 4x our invested capital. When we get there, that's when we sell.
Good. Well, I'm just conscious we're coming towards the end of this Q&A session, so do keep the questions coming in. Again, we will get back to you subsequently. I mean, let's go a bit more global here because a question here about the U.S. So the new Inflation Reduction Act in the U.S. allocates, I think, $5.3 billion in incentives for hydrogen and is really turbocharging the industry with tax credits worth up to $3 per kilogram of green hydrogen. Thoughts about entering the U.S. market or elsewhere? You know, think of maybe places like Japan.
Yes. It's been a game changer for the U.S. Prior to the Inflation Reduction Act, we really looked upon the U.S. as a blue hydrogen province.
Mm.
Technically, we could do blue hydrogen, but we prefer to do green hydrogen. There are simply more projects in Europe that look interesting. This has really changed the way the U.S. looks at hydrogen. Now they are looking at electrolysis of water to make green hydrogen. We are currently looking at a project in the Gulf of Mexico. Interesting 'cause that's the place that we used to work when we were in the oil and gas sector years ago. There are very large off-takers with MOUs and letters of intent that are signing up on green hydrogen projects in the U.S., and we are very keen to get into those projects and we think we are very well connected.
That's gonna be a game changer, and that's what we're going after out there. You mentioned Asia-Pacific as well.
Mm.
The interesting move there is from what we used to consider the gas route from Australia up to South Korea and Japan, where most of the LNG is going. We're starting to see those same trade routes switched over to hydrogen production, which means that there are green hydrogen production projects in Australia with an awful lot of very cheap solar energy and access to water as well. We're starting to see those as an interesting route for projects. U.S. and Australia feeding into Asia-Pacific very much what we're looking at at the moment.
If you can allow yourself a moment of reflection after the first year, any thoughts on lessons learned so far? You know, of the investments you've made to date, which ones do you feel will have the highest return as the industry clearly develops in the coming years?
Yeah. Well, I think it's the easy answer to that in the shorter term, which is the next sort of 2-3 years, is that there is going to be a shortage of electrolyzers.
Mm.
Companies like Sunfire in the portfolio, companies like Elcogen that make the plates and the cells that go into solid oxide fuel cells and electrolyzers are in prime position. We will look for more investments in that area. That's quite an easy win, we think. As energy prices in Europe exacerbated by the politics of hydrocarbons pushes up the cost of hydrocarbons as a fuel, that will accelerate the move towards electrolyzers. That's an easy area for us to invest into. What do we look for? Apart from that particular where are they in the food chain, making green hydrogen, shipping it, transporting it's this front end, which we might call the upstream, is the interesting part for us.
That's how we would look at the initial category of the investment. What we've learned is that you've got to get a management team that is realistic about what they're doing, that they're not bedazzled by the hydrogen sector. They're engineers. They've been doing it. They've got a track record. That's a very important part. Being with the right co-investors is very important. Some of our most successful investments we think so far are working really well because we see the investment the same way that our co-investors do. Having a great team around you. We've had good growth in the team from there are now 10 of us, six of us full time.
Having great people who've got the initiative and the knowledge and the sort of vision to see how these projects, and they want to take on the responsibilities.
Mm.
That's working really, really well together with having great advisors.
Thank you for that. Just coming to the last couple of questions, we'll see whether any other key questions that we can take from those last questions online. Just building on that last question, just maybe a word about milestones going forward. Do you set milestones? What are your milestones for the next year?
Yes. I mean, the first milestone in the context of the fund is to grow the assets under management because we really wanna tell investors that this market, the size and the quality of the opportunities, despite the macroeconomic backdrop appearing to be dark, and if you were to measure the hydrogen sector just by looking at listed company performance, you would think it was a disaster. But it's absolutely not in the private sector. The amount of political and government support, the funding, that's available to new projects and companies is really driving extreme growth. One of the big milestones is to get more cash under management. So we will be fundraising continually, but particularly over the next year.
In terms of actual the nitty-gritty milestones, these are baked into every investment that we make. Every shareholder agreement is very painful for the company we're investing into because we agree these things at the term sheet stage, but when you get to the shareholder agreement, it's the penny drops with companies that if we don't hit this revenue target by two in the next two years, we're going to put in gentle ratchets to say that we can acquire more shares at lower valuations, which is a great incentive. That's the sort of thing that we do in terms of, you know, micromanaging in terms of milestones for the companies themselves.
The last question, I think you've touched on this already, but quite a few questions we've had online really around the same point. Just how long do you expect to hold assets for?
Yeah.
I know it's a big open question, but.
We say to the companies that ask the same question.
Mm
Between 2 and 5 years.
Yeah.
That's the condition of investment that we've got to see that multiple of value growth within that timeframe. As I think somebody's question has already spotted, some companies will get there before others. I think some of our electrolyzer companies will be in that category. They will IPO, they will trade sale within the next 2-3 years. Those will be the low-hanging fruit. Companies like Cranfield, the applications. Mobility, you see, we don't think is really gonna become a value-creating sector for at least another 2-3 years. We need to get into some of those investments now. They tend to come later. 2-5 years is the easy number.
Well, thank you, Richard. That I'm afraid is all we've got time for. I really appreciate you taking all the questions on the chin yourself while JJ was in transit. Thank you very much.
Well, this is real life. JJ is doing real work.
Absolutely
With a real company in a real board meeting. That's the reason he can't finish off. Yeah.
I'm gonna hand back to Paul to say a couple of words.
Thank you, Simon. Richard, thank you indeed for covering off all those questions. Of course, any further questions, the company have the ability to review all those questions submitted then. We'll publish responses where appropriate to do so on the Investor Meet Company platform. Richard, just a final few words, if I may, just before redirecting investors to give you some feedback. If you do have just a couple of closing comments, that'd be fantastic. Thank you.
Yeah. Thanks very much. Well, listen, thanks very much to everybody that's joined the call today. Despite what you might be seeing in the markets about the doom and gloom of macroeconomics, this sector is the one sector which is a bright spot. Being in the private part of this sector is the best place to be. We really thank you for your support and being part of HydrogenOne. The journey is just beginning. Thank you very much.
That's fantastic. Simon, Richard, thank you indeed, and thank you to JJ as well for updating investors today. Could I please ask investors not to close the session? You'll be automatically redirected to provide your feedback directly to the company. This will only take a few moments to do and is greatly valued. On behalf of the management team of HydrogenOne Capital Growth plc, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you and good afternoon to you all.
Thank you.