Intelligent Energy Ltd
I have spent the last decade working with high growth companies in the energy sector.
I have invested in such companies; I have advised investors where to invest and where not to invest; and now I advise companies on how to raise capital and how best to navigate their growth paths.
One of the results of my experience is that I have a lot of respect for entrepreneurs and executives in fast growing companies especially those focused on conservative and capital intensive industries such as energy. It is not easy for company leadership to keep growth momentum and focus while at the same time putting structures in place which enable solid financial control and good customer service.
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It also requires hard word and I know many a growth company where the senior executives work 80 hours per week.
For a company to be successful though you also need the industry to be successful. If the industry is growing it is much easier for the investor to justify investing.
To add to that a strong competitor is very good for benchmarking purposes. Thus in the internet area you have a Google and a Yahoo or in the computer area PCs and Macs.
Competition breaths success. In immature industries competition is critical for benchmarking.
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This is especially the case in capital intensive technologies such as fuel cells where economies of scale are needed to drive the market and where the market is needed to drive fuel cells.
In the area of fuel cells there are only a handful of successfully listed companies such as Ballard Power, Hydrogenics, Plug Power, SFC Energy and the industry needs them to be successful if it is to be successful.
We have seem hope, hype and collapse before in the fuel cell area and investors have very long memories of past failures.
It was thus with great hope that I looked at the IPO of Intelligent Energy on the London Stock Exchange two years ago.
At the time Intelligent Energy was the biggest pure technology flotation in five years in the UK. It was also the biggest fuel cell IPO in a decade.
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The listing raised close to a $75m at a valuation of $750m, with the proceeds being used to launch Intelligent Energy’s USB sized mobile phone charger, the UPP, and build emergency power back-up mobile phone masts in India.
However, after the first day of trading when the share price closed down 12% from its IPO price I must admit I began to get worried.
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I had a right to be as since then the share price has continued to fall on a tail of poor execution and shocking performance.
And then last Friday came this simple press release with the words: “The Company refers to its announcement on 26 February 2016 which included an update on the Company’s proposed funding process.
The Company announces that, in light of recent and unexpected developments in the discussions with various parties, the Company will not be able to complete a funding process, in sufficient quanta, by the end of Q1 2016.
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Further, at this stage, there can be no certainty that an appropriate funding plan can be implemented at all. The Company is reviewing all options and further announcements will be made in due course.”
The share price closed Friday at 4 pence, down 91% on that day alone and Intelligent Energy is now worth $20m.
But the repercussions are much wider than for Intelligent Energy management and its shareholders. I spoke to the CEO of an Intelligent Energy competitor over the weekend and in his words “he did not know whether to jump for joy or cry.” He was happy that a competitor was doing badly but he was not happy that that the competitor was doing so badly.
Intelligent Energy is a benchmark company for all those involved in the fuel cell sector.
It’s strong IPO valuation gave credibility to the view that fuel cells will revolutionize our world and that there are now real commercial markets for fuel cells.
Other companies benefited from their strong valuation. But their share price collapse will have the exact opposite impact.
In addition, it will throw doubt over the future of fuel cells. It will also throw doubts over the investment bankers and investors involved in the IPO of Intelligent Energy. And worse still, none of these doubts may be justified but Intelligent Energy’s management team inability to properly execute effects all of us involved in financing fuel cell companies and the greater world of energy technologies.