How Ardian helped launch ‘world’s largest clean hydrogen infra platform’

Paris-based Ardian and FiveT Hydrogen, a clean hydrogen private investment and asset management platform based in Zurich, have joined forces to launch Hy24. Billed as “the world’s largest clean hydrogen infrastructure investment platform” by the two partners, Hy24 will invest across the entire hydrogen value chain, reports affiliate title Infrastructure Investor.

The 50:50 joint venture was selected from among 10 fund managers to manage a clean hydrogen infrastructure fund backed by TotalEnergies, AirLiquide and Vinci Concessions. The fund, which has a target of €1.5 billion, has already secured commitments of €800 million, Ardian and FiveT Hydrogen said in a statement.

“The fund is the result of distinctive initiatives from two groups of investors,” according to the statement. The first comprises the three French companies sponsoring the fund, each committing €100 million. The second comprises three major US industrial companies: Plug Power, a developer of hydrogen fuel cell systems; Chart Industries, a manufacturer of equipment servicing the oil and gas industries; and Baker Hughes, an oil field services company. The latter three were cornerstone investors in FiveT Hydrogen.

South Korea’s Lotte Chemical has also confirmed its intention to join as an anchor investor, the first Asian company to do so, while “the fund expects to attract further investments from large financial players, with AXA as anchor investor”, according to the statement.

Hydrogen picking up steam

“We started dedicating a team on hydrogen two years ago, but then we saw an acceleration of projects, much faster than anticipated,” Mathias Burghardt, head of infrastructure at Ardian, tells Infrastructure Investor.

“When we received this initiative led by all these large, industrial organisations, like TotalEnergies, Air Liquide and Vinci, we said, ‘This is an incredible opportunity’. So, we decided to partner with the best team in the industry, FiveT Hydrogen.”

FiveT Hydrogen was co-founded by Pierre-Etienne Franc, who also serves as its chief executive, in April. It is part of FiveT Capital, an asset manager founded in 2006. Before launching FiveT Hydrogen, Franc spent nearly 26 years at Air Liquide, most recently as vice-president, managing the Hydrogen Energy World Business Unit.

The Hy24 fund, which is set up as an impact fund in accordance with Article 9 of the EU’s Sustainable Finance Disclosure Regulation, is very similar to an infrastructure fund, with a lifecycle of 12 years and a six-year investment period. “It’s not that different but with a higher diversification ratio explained by the lower maturity of the industry,” Burghardt said.

According to the statement, the fund’s portfolio will be diversified across geographies – Europe, Americas and Asia – and value chains, from upstream projects like green hydrogen production, to downstream projects like captive fleet and refuelling stations.

Repurposing hydrocarbon infra

Asked whether all those investments will be considered infrastructure, Burghardt replies: “We will take a project finance approach, focusing on assets where we can mitigate technological risk and volume risk. So, whether that’s via subsidies of the capex that will make these investments competitive compared to other energy sources with contract for differences, or having commitments of scale that’s been identified and confirmed when we invest in downstream projects.

“As for midstream, it is very interesting that 75 percent of the hydrogen infrastructure will come from existing hydrocarbon infrastructure that will be repurposed. So, it’s not about duplicating everything but transitioning the hydrocarbon industry.”

One example of what Burghardt describes is Geosél, an underground liquid storage facility Ardian invested in alongside EDF Invest in September 2015. The facility, which has a capacity of nearly nine million cubic meters, stores roughly 40 percent of France’s national oil reserves. In addition to the underground storage caverns, the company also operates related pipelines linked to the seaport of Fos in Marseilles and to petrochemical facilities in the region.

“The aim is to use these caverns to store hydrogen as well,” Burghardt said. “This site has a salt water lake and the idea is to install solar panels directly connected to an electrolysis plant producing hydrogen. Hydrogen can be transported to meet the needs of the surrounding industrial area, but also to Northern Europe. That will be a fantastic conversion of a hydrocarbon site to one that will promote the energy transition.”

As for the returns the Hy24 fund will be targeting, Burghardt added: “It’s true that [hydrogen] is less mature than infrastructure and therefore the risk profile is very different. But I am very positively surprised by the appetite from institutional investors – pension funds, sovereign wealth funds, insurance companies – that want to be a part of it.

“I think people realise that this industry is going to grow at an incredible pace. This will be a new asset class and they want to be a first mover because they realise that with renewables, the best returns were in the beginning. I think it will become a strong asset class before 2030.”