Aspen Aerogels has raised US$150 million in financing from a Koch family investment firm to help grow its aerogel thermal barrier technology division, including new products which prevent thermal runaway in batteries.
Koch Strategic Platforms (KSP) has agreed to buy convertible notes in Aspen worth US$100 million maturing in 2027 and shares in the firm worth US$50 million by the end of Q1 this year/early Q2, the companies announced 17 February.
It comes eight months after a separate US$75 million investment by KSP in Aspen and will help the company pursue ‘aerogel thermal barrier growth opportunities’, the announcement said.
Aspen Aerogels is a stock-listed manufacturing company specialising in aerogels, which are synthetic gel-derived materials for insulation and cooling that have a variety of applications.
The material is made by replacing the liquid component of a gel with air, resulting in a low density, low thermal conductivity material that feels like polystyrene. It is much more efficient than regular insulation but high prices have limited it to a few niche industries.
To-date it has mainly sold to the energy infrastructure sector, primarily fossil fuels, and building materials markets but has been developing thermal barrier aerogels to tackle thermal runaway in lithium-ion batteries.
But this new segment did not materially contribute to revenues last year which totalled US$121 million, as per its 2021 annual results. All revenue was attributed to ‘energy infrastructure’ yet the company aims for a whopping 75% of revenues in 2025 to be from thermal barrier technology.
Shortly before issuing its press release regarding the investment from KSP, the company said it will construct an advanced manufacturing facility in Bulloch County, Georgia, US, tripling its aerogel production capacity.
Aspen intends to invest at least US$325 million in building the plant, adding to an existing facility in Rhode Island. The 500,000 square foot site, on 90 acres of land in Bulloch County’s Southern Gateway Commerce Park, is expected to open up late next year. Georgia is set to become a key hub for the US electric vehicle (EV) battery sector, with battery maker SK Innovation building two gigafactories in the state and a recent announcement that the US’ largest battery recycling plant is being built there by Ascend Elements (previously known as Battery Resourcers).
Solution tweaked for cell-to-cell applications
Aspen’s CEO Donald R. Young indicated the money raised from KSP will go towards growing and expanding the thermal barrier division.
“Aspen’s strategy is to leverage our aerogel technology platform into high-value, high-growth markets, driven by our ‘PyroThin’ thermal barriers which address thermal runaway in electric vehicles and by our energy infrastructure products which promote resource efficiency, asset resiliency and safety in traditional and emerging energy settings,” he said.
“KSP’s additional investment will support our growth and allow us to address additional high-value applications in ESG driven markets, including battery materials, hydrogen energy, carbon capture, and filtration, among others, further solidifying our position as a technology leader in sustainability.”
It claimed “US$1 billion of potential revenue from current customers” for electric vehicle (EV) thermal barriers alone, although as mentioned before it posted very little revenue from this last year.
The company says on its website that PyroThin is ‘optimised for helping to mitigate thermal runaway in EV and energy storage systems (ESS).’ It has tweaked its solution for cell-to-cell barrier applications and those for modules and battery packs.
It claims the market opportunity from 2021-2030 for its products in the EV thermal barriers space is US$30 billion, US$37 billion for ‘EV Battery Materials’ and US$31 billion for ‘Energy Infrastructure’.
KSP’s parent company Koch Industries is known for its background in fossil fuels industries and has been accused by groups including Greenpeace of funding climate change-sceptic propaganda. More recently, it and its many group companies have diversified to be involved in a large number of different industry areas today, from chemicals and biofuels to polymers and fibres, software and data analytics and many others.
This has extended to recent investments in energy storage and battery companies through KSP. Energy-Storage.news reported in July last year that KSP was investing US$100 million into zinc battery storage company Eos, another US$100 million into recycling specialist Li-Cycle was committed to in September and in October KSP entered a joint venture (JV) with Norwegian startup FREYR Battery to potentially construct 50GWh of annual battery cell production capacity in the US.
German Hydrogen Utility HH2E Wins Investment From UK Firms – BNN
(Bloomberg) — London-based private equity company Foresight Group Holdings Ltd. and investment firm HydrogenOne Capital Growth Plc acquired stakes in HH2E AG and will help the new hydrogen company to develop green energy projects in Germany.
Foresight and HydrogenOne have taken minority equity stakes in HH2E and agreed to co-invest in energy projects, the German company said in a statement on Monday. HH2E — co-founded by Andreas Schierenbeck, former chief executive officer at utility Uniper — plans 2.7 billion euros ($2.8 billion) of investment to build 4 gigawatts of green hydrogen and green heat-production capacity by 2030.
“Germany has one of the largest industrial and manufacturing sectors in the world,” said Schierenbeck. “Leaders in these sectors know they must secure the supply of energy, control energy costs, and find low- or zero-carbon solutions soon. HH2E will be producing green hydrogen located close to the industries that need it.”
Germany aims to get almost 100% of its electricity from renewables by 2035, and is racing to expand green energy capacities as it tries to pivot away from reliance on Russian natural gas. The country plans to install 10 gigawatts of electrolyzer capacity by 2030 to scale up the hydrogen market.
Russia’s Invasion Supercharges Push to Make a New Green Fuel
The two British investment companies will provide most of the capital needed for HH2E’s first five green hydrogen projects, which will need a total of 500 million euros in development costs and have an initial capacity of 500 megawatts. Some of them have the potential to be expanded to 1 gigawatt, according to Schierenbeck.
HH2E seeks to produce green hydrogen cheaper than grey hydrogen — made from natural gas — in the coming years. It is “clear that the economics of green hydrogen are better than the grey and blue, as the latter two depend heavily on the cost of natural gas and carbon,” said Schierenbeck.
“This financing agreement enables a massive acceleration of our development plans,” said HH2E co-founder Mark Page.
©2022 Bloomberg L.P.
It's an ideal time for adopting the Number One defensive investing strategy for retirees – The Globe and Mail
The best way to protect your retirement savings from a market crash is to safely park enough money to cover your income needs for two to three years.
Until 2022, safe parking has meant dead money. Now, with interest rates rising, you can adopt this strategy with a smile on your face. Rates were high enough in mid-May that you could build a three-year ladder of guaranteed investment certificates earning an average return of as much as 3.8 per cent.
A feature of every stock market crash I’ve seen as a personal finance and investing writer is the senior distraught over the idea of having to sell hard-hit stocks and equity funds to cover the minimum annual required withdrawal from a registered retirement income fund. In both the 2008 and 2020 crashes, the federal government allowed a 25 per cent reduction in the minimum RRIF withdrawal for those years. But that’s only a limited benefit and, anyway, seniors shouldn’t depend on the feds for help with their investment portfolios every time stocks plunge.
The best strategy for protecting a RRIF against inevitable stock market declines is to keep a reserve of money to draw from when selling stocks or equity funds would lock in a serious loss. At bare minimum, have enough money for one year. At best, try for two to three years.
You could keep this money in a high interest savings account, where rates have recently climbed to between 1.5 and 2 per cent at best among alternative bands and credit unions. If you have the financial flexibility to lock money into a GIC, the best one-, two- and three-year rates in mid-May were 3.35, 3.95 and 4.1 per cent, respectively.
Those rates were available from alt banks that sometimes don’t offer RRIF accounts. An alternative is to see what GIC rates your broker offers for RRIFs. Online brokers have unusually competitive GIC rates right now – not as high as alternative GIC issuers like Oaken Financial and EQ Bank, but close.
With a three-year GIC ladder, you invest equal amounts in terms of one through three years and invest each maturing GIC into a new three-year term. If a two-year term seems a better fit for you, try that. They key is to have cash safely stowed so that you can give your stocks time to recover from the next stock market decline.
— Rob Carrick, personal finance columnist
This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.
Stocks to ponder
Colliers International Group Inc. (CIGI-T) On May 3, the global real estate services and investment management company reported solid first-quarter earnings results and increased its 2022 outlook. Yet, high inflation, rising interest rates and concerns about a potential recession continue to weigh on stock markets, including Colliers, which is down 23 per cent year-to-date. There has been opportunistic buying on this price weakness, with the company repurchasing nearly 1 million shares in March and April. As well, the chief executive officer recently invested over $17-million in shares of Colliers. Should investors consider buying shares as well? Jennifer Dowty looks at the investment case.
Now is the perfect time to slay these five investing myths
During volatile times like this, it’s important not to let myths sabotage your investing plan. Some of these myths are so pervasive and ingrained in our culture that many people don’t question them. They reflect the way investing is portrayed in the media, from financial websites and business channels to movies and the evening news, where dramatic events – especially ones in which people make or lose a lot of money – get the most attention. John Heinzl presents five of the most common investing myths. Become familiar with them so that, to paraphrase Rudyard Kipling, you can keep your head while everyone else is losing theirs.
Know your history before buying the current dip
Investors who bought stocks in the depths of the great financial crisis in early 2009 were quickly rewarded. So were those who bought the dip in the early days of the COVID pandemic. Will that same bounce occur again? Don’t count on it. Share prices will no doubt eventually recover from their recent weakness – they always do – but reaping the rewards is likely to require more patience this time around, says Ian McGugan.
Bank stocks are reflecting a lot of risk. Now let’s look at the reward
Canadian big bank stocks have tumbled more than 14 per cent over the past three months, as concerns about an oncoming recession rattle equity markets. The potential rewards of buying into this dip are becoming hard to ignore, says David Berman.
Why the Canadian dollar is poised to surge
Forex traders beware: economist David Rosenberg and his team believe any dip in the Canadian dollar should be bought. In fact, they think the loonie is considerably undervalued and will soon zoom up to 83 cents (U.S.). Here’s why.
Why this portfolio manager sold his Magna stock (and wishes he’d bought Disney)
Money manager Denis Taillefer is holding a lot of cash, awaiting what he calls ‘peak interest rate hawkishness.’ Brenda Bouw speaks to the senior portfolio manager at Caldwell Investment Management Ltd. to find out what he has been buying and selling.
Others (for subscribers)
Monday’s Insider Report: CEO and CFO are buying this high-yielding REIT with a 32% gain forecast
Are you a financial advisor? Register for Globe Advisor (www.globeadvisor.com) for free daily and weekly newsletters, in-depth industry coverage and analysis, and access to ProStation – a powerful tool to help you manage your clients’’ portfolios.
Ask Globe Investor
Question: I have stocks in my TFSA and in my cash account. There’s one investment in my TFSA that I think will pay off but will take longer to do so than some in my cash account.
I’m thinking of transferring the one in my TFSA out in kind, creating plenty of room so that I can transfer in some of the investments that are closer to the finish line. What do you think of this strategy? – Chantal M.
Answer: Your logic puzzles me. The main objective of a TFSA is to maximize the tax-sheltered profits on your invested money. But your suggested approach would do the opposite. Let’s look at the two sides of your equation.
You say the stock in the TFSA looks promising but will take longer to pay off. But as its value grows in the TFSA, those gains will be tax-free. Moving the stock to your cash account will mean all the gains from the time of the switch will become taxable when you sell.
Meantime, you want to move stocks that are “closer to the finish line” into the TFSA. To what end? If they are that close to your sell objective, most of your gain is already taxable. Remember, when you make a contribution in kind, the Canada Revenue Agency considers that as a sale at the market price on the day the shares go into the TFSA. You are taxed accordingly. If you really plan to sell soon, moving those shares into the TFSA will not be of much benefit.
You need to consider the potential profit of each stock, not from the time you bought it but from the day it goes into (or comes out of) the TFSA. Those with the highest long-term growth potential should be in the plan.
What’s up in the days ahead
Bonds have been producing terrible returns this year, but many investors still want to hold them as a stabilizer in a balanced portfolio. Are short-term bond funds the way to go? Gordon Pape will have some fixed income advice.
Share your investing successes (or misfires)
Are you interested in being interviewed about your first stock purchase? Globe Investor is looking for Canadians to discuss their experience as part of this new, ongoing feature. If you’d like to be interviewed, please write to: firstname.lastname@example.org with “My First Stock” in the subject line and include a short description of your first stock purchase.
Compiled by Globe Investor Staff
New Zealand Plans More Digital Skills Investment to Bridge Gap – BNN
New Zealand will make a new investment in the digital technologies sector with the aim of increasing skills development and encouraging local companies to market their talents globally.
The government will allocate NZ$20 million ($13 million) over four years from this week’s budget, Minister for the Digital Economy David Clark said in a statement Monday in Wellington. The spending will support the growth of the Software-as-a-Service community and take a new a marketing initiative led by industry in partnership with government, to the world, he said.
“Through this new funding, the SaaS Community can build its momentum further and expand its network,” Clark said. ‘It will also support the delivery of short courses for digital skills development.”
The government wants to address a shortfall of investment in technology education that has created a skills gap and forced several local companies to shift offshore to find the talent they need. A report from the OECD highlighted a weak pipeline of advanced information technology skills while Wellington-based game developer Pikpok this year opened a studio in Colombia to tap talent there that isn’t available at home.
“We know for the digital sector to grow, it needs access to the right people,” said Clark. “Historically, there has been a ‘skills mismatch’, but the key to future success is training our domestic talent with the right skills, and encouraging New Zealanders to participate, whatever their background.”
Changes to the immigration system will help alleviate some of the immediate pressures on industry, with key roles including software engineers entitled to fast track residency, he said.
©2022 Bloomberg L.P.
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