NZ Super Fund down $51m on Bloom stock
The New Zealand Superannuation Fund is down just over a third on its
US$100 million investment in United States ‘‘green technology’’ stock Bloom Energy after the fuel cell company debuted on the New York Stock Exchange overnight on Wednesday.
The initial public offering (IPO) of Bloom has allowed the market value of the NZ Super Fund’s investment in Bloom to be valued for the first time.
The $38 billion fund invested
US$100m (NZ$146m) in Bloom in 2013 and 2014 as part of a series of investments in green tech stocks, another of which – a US$47.5m investment in US wind company Ogin – it wrote off last year.
Bloom shares jumped 66 per cent from their US$15 issue price on their first day of trading on the New York exchange, closing at US$25 and trimming NZ Super’s paper loss.
But NZ Super bought in at a higher price, confirming for the first time yesterday that its US$100m had only bought it 2,587,991 shares in Bloom.
That means that despite Bloom successfully getting its IPO away, the NZ Super Fund’s stake is only worth
US$64.7m, which is US$35.3m
(NZ$51m) less than it paid for it. NZ Super Fund spokeswoman Catherine Etheredge confirmed that under the terms of the IPO the fund is prevented from selling its shares in Bloom for six months.
Bloom’s fuel cells are designed to convert natural gas into electricity at customers’ sites, reducing the transmission losses involved when gas is instead burnt for electricity in conventional power stations. They have the additional advantage that they reduce customers’ dependence on the electricity grid.
Customers include Apple, Amazon, Google and US phone giant AT&T.
But critics of the company have questioned whether its technology represents an environmental advance that should be subsidised.
Bloom reported a US$281m net loss in the year to December and acknowledged in its prospectus that its business depended on ‘‘rebates, tax credits and other financial incentives’’.
Controversial US website Breitbart published an article in 2012 that claimed its fuel cells produced more emissions than burning gas in combined gas cycle generators.
Etheredge said the fund did not consider the Breitbart website to be a credible information source. ‘‘We reviewed the energy efficiency and carbon emissions benefits at due diligence and post investment, and are satisfied with the company’s technical attributes,’’ she said.
NZ Super acting chief investment officer Mark Fennell pointed out that any loss the fund had made on Bloom was only on paper, as it had not sold out. ‘‘Our investment returns will only crystallise when we sell our stake,’’ he said.
The fund’s other ‘‘expansion capital investments’’ include stakes in green tech companies View Glass, LanzaTech and Longroad Energy, and in New Zealand venture capital funds.
‘‘We have been very clear that these expansion capital investments are at the riskier end of the spectrum,’’ Fennell said.