Burnaby, B.C.-based fuel-cell producer Loop Energy Inc. is looking to raise $100-million in an initial public offering, capitalizing on a recent investor craze for clean-energy companies.
Formed in 2000 and a long-time partner of Canada’s National Research Council, Loop makes fuel-cell systems to electrify commercial vehicles. The company developed its first product prototype in 2016 and has been commercializing the system in recent years.
Much like hometown rival Ballard Power Systems Inc., Loop is betting that battery-only electric fleets will not offer commercial users as many benefits, unless they make a big tradeoff on their cargo capacity. A fuel-cell system is lighter and less range-constrained than a battery-electric system – and the vehicle it powers can be refuelled as quickly as a gas tank.
The company’s proprietary fuel-cell system, known as the eFlow bipolar plate, is powered with hydrogen and its only waste byproduct is water. Loop says it believes its system will have better fuel efficiency and higher durability than its competitors’, and management is currently focused on selling it to producers of light-commercial vehicles and medium-duty trucks in Europe and China.
The company’s share sale is launching into a frothy market, with the S&P/TSX Composite Index setting a record high early Monday. The hot market has unleashed a flurry of IPOs, and many of the companies that have gone public over the past six months have seen their shares soar once they started trading.
Most of Canada’s recent IPOs have come from the tech, biotech and health care sectors, but a wave of clean-energy deals is brewing. Altius Minerals Corp. is now marketing its own IPO, which involves spinning out a renewable power division to public investors.
Globally, clean energy has taken precedence in the broad market rally, with institutional shareholders on the hunt for companies that promote ESG principles – that is, those with good environmental, social and governance standards. In Canada, Ballard has seen its share price soar 240 per cent over the past year, meanwhile shares of Plug Power Inc., an American fuel-cell producer, have jumped 1,400 per cent over the same time period.
Despite the craze, fuel-cell technology is still in its infancy in terms of wide-scale adoption. The industry saw a massive influx of money during the dot-com boom – which sent Ballard’s shares soaring – but the hype evaporated almost overnight. While the science behind it has evolved by leaps and bounds since then, commercialization is still in its early days and battery-powered cars have garnered much more attention until now.
To boost its appeal, Loop has brought on two special advisers as part of the IPO. John Browne, the former chief executive officer of BP PLC, is working with the company, as is Lance Uggla, who is originally from Burnaby, and who recently sold his financial data company IHS Markit Ltd. for US$39-billion. Loop is issuing the two advisers a total of $1-million worth of warrants that will be exercisable at the IPO price.
Loop currently produces at two manufacturing facilities: One in Burnaby, and another in Langfang, China.
To stand out among rivals, the company’s eFlow bipolar plate technology is designed to more uniformly distribute reactions across the length of the plate, leading to less degradation of the fuel-cell system.
“Conventional fuel-cell bipolar plates generally have areas near the inlet with a focused concentration of reactants, hydrogen and oxygen, which results in hotspots.” the company said in its IPO filing, adding that such concentration increases electrode wear and reduces utilization.
Loop is currently targeting the European and Chinese markets because they have the highest levels of government support and strong anti-emissions regulations. The company aims to expand into the heavy-duty truck market over the next decade.
At the moment, Loop has 36 full-time employees, and the company lost $6.1-million in the first nine months of 2020 because its commercialization is still in its infancy. The company’s chief scientist, Sean MacKinnon, has previously worked for Ballard, General Motors Co. and the National Research Council of Canada.
Loop’s IPO is being led by National Bank Financial and the company aims to price its shares between $12 and $16 each. Proceeds from the offering will be used for product and technology development, as well as for sales and general expenses.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.