Listed companies on the stock market have key events we are familiar with on the positive side: the swing from loss to profit, profits exceeding expectations, a big contract win, first production or being fully funded to execute a strategy. The latter is of course particularly pleasing in the natural resources space, but has been witnessed today at Powerhouse Energy, the waste plastic to hydrogen group.
What is particularly noteworthy as far as Powerhouse reaching this particular fundamental inflection point, is that it has been achieved against almost universal naysaying over the years. This is something which ironically is a cross the most innovative companies have to bear – one can mention Tesla (TSLA) as the ultimate example.
In the case of Powerhouse, despite its mission to solve the epic waste plastic crisis, and produce a clean fuel in hydrogen, as well as electricity, the cynics and the bears were consistently on the case. Even the eco-warriors, who should have been on side, preferred to moan and virtue signal regarding damage to the environment, rather than back Powerhouse in building the first plant.
In the end though, it was Peel Environmental (part of commercial real estate giant, Peel Holdings)which helped begin the transformation at Powerhouse, providing the Protos site and now the funding for a rollout of DMG energy recovery installations.
The Powerhouse board has also been beefed up, with the arrival of former Government Minister Tim Yeo, Allan Vlah from Aviva and Myles Kitcher from Peel. To complete the process, Powerhouse acquired engineering contractor Waste2tricity earlier this year meaning the combined group can deliver all aspects of the proposed initial UK rollout of 70 plants “in-house”.
However, it may be that today’s £5m fund raise is what defines Powerhouse Energy as a serious entity, rather in the manner of the film, The Wizard of Oz. The latest investment is a black and white to technicolor moment, as an international institutional investor enters the fray, joining Peel and the major shareholder White family in the raise. The added kickers of the fund raise being that it massively oversubscribed, at only a small discount to the prevailing market price, and that no additional stock will come on the market as the raise in derived from long term holders. In the wake of the raise, Peel will additionally provide access to the front engineering design, full access to the Protos site and make Powerhouse’s programme a flagship for international commercial sales.
Such backing effectively ends the stone throwing the company has received over the years, and ensures it is funded to execute its strategy, one of the aforementioned positive pillars of the stock market. Added to this, Powerhouse has received both the validation, both institutional and financial, as well as being given the backing to go from being a small cap to a mid-tier stock. It will now be “above the clouds” in terms of the junior market back-biting from which so many companies suffer unnecessarily.
So what can we expect going forward? The renewable energy space has been in focus since the pandemic struck earlier this year, and it is clear that momentum is gathering, particularly with reference to air pollution of which hydrogen as fuel is a pivotal part.
Now that the perceived lack of capital and institutional backing issues have been settled once and for all at Powerhouse Energy, we can expect international offtake agreements to be forthcoming – all on the basis of £500,000 annual recurring revenue per DMG plant. Above all, the Powerhouse’s story has now become real, credible and secured financially.
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