Sustainable Equity Issue: Lhyfe's €118.3m IPO

IFR Awards 2022
3 min read
Tom Hill

The good Lhyfe
Launching a European IPO less than a month after the outbreak of war in Ukraine was ambitious but for French green hydrogen producer Lhyfe the spotlight being shone on energy security at least helped underscore the importance of its unique equity story.

“The case in itself was even more relevant at the time but then when it comes to market conditions those were tough times and that was a rocky rollercoaster,” said Gregoire Angleys, a director in ECM at joint bookrunner Bryan, Garnier.

Lhyfe's IPO followed listings of hydrogen tech supplier Haffner in February and fuel cell developer HDF Energy in 2021, however, it was set apart as a pure-play producer of green hydrogen.

One idea that caught the imagination of investors was Lhyfe's ambition to redefine the notion of a "green unicorn" and be one of the first companies to avoid the release of 1 billion tons of C02.

Key for investors though was tangible proof of concept to back up an extensive pipeline, which Lhyfe was able to demonstrate with its first industrial site opening in late 2021.

The site was viewed by around 30 investors ahead of launching the IPO.

“If we didn’t have this first plant I think we probably wouldn’t have an IPO," said Jonathan Banet, ECM syndicate manager at Natixis. "The acceleration of this first plant accelerated the IPO."

Adding weight to Lhyfe’s credentials was backing from Portuguese renewable power company EDP Renovaveis which came in as a cornerstone for €25m and also as a corporate partner, giving Lhyfe access to the renewable energy it needs to produce green hydrogen and further validate its growth plans.

Angleys noted there had been a huge effort to provide detail on the pipeline by all involved and this was well received by investors.

"Definitely [having] an industrial player, and a global industry player like EDPR, it’s very relevant for a story like Lhyfe," said Banet.

Cornerstone commitments also came from CDC Croissance and Amundsen Investment Management for a further €14m.

In the first week of a two-week bookbuild the deal was covered following meetings with over 150 investors. Lhyfe still faced tough markets with some orders later lost due to volatility, however, the book never went into reverse thanks to successful meetings in the final days of bookbuilding.

Lhyfe priced at the bottom of its €8.75–€11.75 range and initially fell, though bookrunner Portzamparc BNP Paribas was still able to exercise most of the greenshoe to lift proceeds from €110m to €118.3m. Performance has been far better than peers with Lhyfe ending the year 1% below issue (having peaked at €9.50), versus a 77% drop for Haffner and 22% fall for HDF across the year.

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