Join our community of smart investors

ITM Power to raise £250m for new UK factory

Hydrogen electrolyser company to up spending on an "acceleration of the group's technology capabilities" in its second major fundraise in a year
ITM Power to raise £250m for new UK factory
  • ITM Power placing of £250m to be done through an accelerated bookbuild
  • Hydrogen electrolyser company already sitting on heavy cash pile from previous fundraising

Hydrogen electrolyser company ITM Power (ITM) announced a £250m placing on Thursday afternoon to fund a major expansion programme. On Friday morning, ITM said the placing had been done at 400p, a 14 per cent discount to its previous closing price, sending its shares down 10 per cent to 429p. 

The company's technology is used to produce hydrogen gas from water and electricity, which can then be an energy store or used in industrial processes. This is the second major placing in the past year, after a £172m fundraise that closed in November 2020.

As of 31 July its cash and cash equivalents sat at £171m. 

Green hydrogen is held up as a solution to decarbonising heavy-polluting industries like steel and cement manufacturing, although massive amounts of new renewable energy capacity is needed for this to result in emissions cuts. 

Shareholders will need to back the new dilutionary raising at a 3 November meeting, while existing major investor and joint venture partner Linde (US:LIN) has signed on for £20m in new shares. ITM also published a trading update for its first quarter, running to 31 July, on Thursday. Sales were £1.2m and cash burn was £5.3m for the quarter. 

ITM's plans for the £250m include automating processes at its existing factory and building new UK and international sites, growing capacity to 5 gigawatts (GW), referring to the annual output in terms of electrolysers. Its factory in Sheffield currently has capacity of 1GW. 

This is certainly an ambitious play to fuel more growth while hydrogen is hot. We have supported buying ITM over fellow hydrogen and fuel cell player Ceres Power (CWR). We are still bullish on them thanks to the massive amount of cash flying into the hydrogen space right now, so hopefully the prospectus attached to this placing makes clearer why it is necessary when the company is already so flush. Buy. 

Last IC View: Buy, 410p, 13 Sept 2021