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NHOA: TCC share purchase and delisting to enable ‘gigawatt-hour scale’ project bids

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Taiwan Cement Corporation’s buyout of NHOA is a “reconfirmation of strategic financial support” from the majority shareholder, Energy-Storage.news has heard.   

Taiwan Cement Corporation (TCC Group Holdings) owns 87.78% of the share capital in Italy-headquartered NHOA, or New HOrizons Ahead, to give it its full name.

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However, TCC intends to fully acquire the company and take it into full private ownership, delisting NHOA from the Euronext Paris Exchange.

TCC will file a simplified Tender Offer for NHOA shares before a squeeze-out of remaining holdings, as reported by Energy-Storage.news on 13 June.

NHOA has business lines in the battery energy storage system (BESS) space and electric mobility infrastructure solutions. It has been majority-owned by TCC since 2021 after the sale of a 60.48% stake by previous owner Engie, under which the Italian company traded as Engie EPS from 2018.

Reasons given included an underperforming stock price due to low volume of trading and the freedom that going private would offer TCC to make long-term strategic decisions around investments.

The move is “almost a bit overdue,” with TCC already holding such a big stake, Giuseppe Artizzu, CEO of NHOA Energy, the business line active in the BESS space, in an exclusive interview with Energy-Storage.news Premium.

“Clearly a listing is something that is beneficial to the extent that you have a liquid stock that trades, that reflects news flow, and the price is reflective of the underlying value of the company, so that the moment the company needs further capital, you can tap into the capital, at least in proportion to the existing ownership structure,” Artizzu said.

In 2023, NHOA made a significant capital raise through a 250 million (US$270 million) rights issue in which TCC was the main participant and increased its holding to its current level.

The resulting “significant dilution” and the impact it made on share price, coupled with the low volumes of trading made the listing “almost counterproductive over the last year,” Artizzu said.

“The stock was not trading. The value was basically discounted on cash balance in the balance sheet of the company, so it was not reflective of the fundamentals,” he said.

“Generally speaking, something had to happen. I don’t think really this is big news, this is just a consequence of something that had been happening for more than a year and it is lastly a financial efficiency driver.”

Going private to put NHOA in running for ‘gigawatt-hour scale’ projects

Artizzu said the impact on the energy storage business would likely be minor, but it would facilitate greater financial support from its parent company when a balance sheet backup might be needed.

NHOA, which began as an integrator specialised in microgrids and has traded on Euronext Paris since 2015, has been working on increasingly larger size and capacity BESS projects in the US, Europe and Asia-Pacific markets.

The company been increasing scale of average project in common with many of its rival integrators, but it has yet to bid for projects in the gigawatt-hour scale as a handful of competitors have done.

Artizzu said that NHOA could likely handle projects of up to half a gigawatt-hour, but that for projects twice that size and bigger, the balance sheet backstop and “clean financial structure” would help.

“We still haven’t won projects in the gigawatt-hour scale, and clearly we want those because we want to be on the big stage,” Artizzu said.

Italian lawmakers scrutinising deal, Reuters says

Reuters reported yesterday (3 July) that the proposed transaction is under “government scrutiny” in Italy, according to two unnamed sources the news agency spoke to.  

Noting that under Italian law governance changes by companies involved in strategic sectors like telecoms and energy can be blocked by the government, as well as strategic or domestic “forays,” Reuters said Italian prime minister Giorgia Meloni’s office wants to check whether TCC plans to move NHOA’s strategic activities out of Italy, or change the management structure.

The news agency also said that after the initial 2021 acquisition, then-prime minister Mario Draghi’s government ordered TCC to notify the Italian government of any possible relocation of NHOA activities as well as changes in governance.

‘Financial visibility is in our interests’

While NHOA apparently declined to comment on yesterday’s news to Reuters, Giuseppe Artizzu described to the potential deal to Energy-Storage.news as a “reconfirmation of financial support,” from TCC that would also enable more agile decision-making.

“This is done in order to make things easier both from a strategic and from a financial support perspective. Absolutely, this is something in which taking out that disturbance coming from the stock price movements, that was not reflective of performance, helps”

NHOA’s majority owner is a multi-billion-dollar market cap company which has sought to diversify from over-reliance on its core cement business, with ‘New Energy’ including energy storage a key pillar of that strategy.

TCC also has an independent power producer (IPP) business in Taiwan, EV fast-charging networks in Asia and Europe, and its own high-performance battery cell manufacturer, Molicell.

One advantage of the public listing, at least for journalists, was the visibility it offered into NHOA’s financial results.

Artizzu said that NHOA already has consolidated financial results that are in the public domain summarising its financial position, and that maintaining transparency will continue to be important.

“We won’t have a quarterly call [anymore] but we have an interest in being quite transparent from a financial perspective, for the simple reason that bankability is critical to our role as energy storage suppliers, in the contractor business model,” Artizzu said.

“If we want to be a bankable provider, we need to give visibility, so it is going to be in my interest to ensure that enough visibility is given to the market on our financial reports.”

Energy-Storage.news’ publisher Solar Media will host the 2nd Energy Storage Summit Asia next week, 9-10 July 2024 in Singapore. The event will help give clarity on this nascent, yet quickly growing market, bringing together a community of credible independent generators, policymakers, banks, funds, off-takers and technology providers. For more information, go to the website.

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