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NZ Super Fund unfazed by Bloom Energy's IPO pricing

Thursday 26th July 2018

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The New Zealand Superannuation Fund isn't concerned that US fuel cell maker Bloom Energy is trading below what the Kiwi pension fund paid for its 2.4 percent stake, saying it's a long-term investor. 

California, US-based Bloom went public this week, selling shares in an initial public offering at US$15 apiece which closed at US$25, valuing the company at US$2.65 billion. The NZ Super Fund first invested in Bloom in 2013 with a US$50 million stake and followed that up the following year with a further US$50 million, and today said it has almost 2.6 million unlisted Class B shares, which have enhanced voting rights for up to five years, amounting to 2.4 percent of the company. The stake is subject to a lock-up agreement meaning the NZ Super Fund can't sell for 180 days, and can be converted into listed stock at any time. 

"As a long-term investor the NZ Super Fund’s primary focus is on what we buy an asset for and the value we ultimately realise," acting chief investment officer Mark Fennell said in a statement. "Our investment returns will only crystallise when we sell our stake. What our investment is worth at various interim time periods is not as important to the NZ Super Fund as it is to investors with a shorter investment horizon."

Since its 2001 founding, Bloom has reportedly raised about US$2 billion in debt and equity, and this week's IPO injected about US$270 million. The alternative energy company had planned to go public two years ago, but shelved those plans when a federal government subsidy for alternative energy systems was allowed to expire. That tax credit was restored when US President Donald Trump signed off on the federal budget in February, re-opening the door for an IPO.

Bloom's offer document shows the power cell maker reported a net loss to equity holders of US$262.6 million in calendar 2017, including US$108.6 million of interest costs and a US$15 million unrealised loss on derivatives. The operating loss narrowed to US$157.3 million from US$241 million in 2016, with revenue climbing 80 percent to US$376 million.

Fennell said the Super Fund is still interested in new investments in alternative energy and infrastructure, which it anticipates will benefit from a changing global energy sector. 

“We look forward to supporting Bloom Energy as a listed entity for mutual benefit," he said. "Expansion capital investments, such as this one, are an appropriate part of the mix for a long-term investor seeking to maximise returns.


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