Saturday 22 July 2017

Irish investors lose out in Openhydro €90m fundraising

Original backers in wave energy firm will see holdings diluted in cash call

The shares are being issued at €1.60, which compares with a 2011 fundraising when clients of Davy and Goodbody stockbrokers and other investors bought into the company at €3.50 a share. Stock photo: Reuters
The shares are being issued at €1.60, which compares with a 2011 fundraising when clients of Davy and Goodbody stockbrokers and other investors bought into the company at €3.50 a share. Stock photo: Reuters

Samantha McCaughren and Gavin McLoughlin

Irish wave energy company Openhydro is raising between €50m and €90m from shareholders to fund the commercialisation of its tidal technology.

However, a number of original shareholders have expressed their unhappiness with this latest cashcall and will not participate in the fundraising which values stock in the company at considerably lower levels than in previous raisings. As a result, their holdings will be diluted.

The fundraising is being backed by majority shareholder DCNS, a French defence company. Irish investors own over 35pc of the company.

The shares are being issued at €1.60, which compares with a 2011 fundraising when clients of Davy and Goodbody stockbrokers and other investors bought into the company at €3.50 a share.

Openhydro was founded by Irish businessman Brendan Gilmore, and DCNS took a majority stake in the business in early 2013, giving shareholders some return on their investment. However, DCNS decided against buying the business outright.

"The board of Openhydro has recently recommended a significant capital injection proposal of between €50m to €90m into the business. The significant capital increase, which is open to all shareholders, was proposed at an Extraordinary General Meeting of shareholders held in Dublin," the company said in a statement to the Sunday Independent.

The company was set up in 2004 with many private investors putting sums of up to €250,000 into the company. There were expectations that a liquidity event, such as a flotation, would give shareholders a chance to exit.

In 2014 DCNS appointed Rothschild to look into a listing for the company but shareholders were told this would not be practical and that further investment was required. The following year it raised close to €50m from shareholders, the majority of which came from DCNS.

Recently appointed chief executive Patrick Gougeon said: "This proposal, which has the strong backing of the overall board, marks an important development for Openhydro, given the current position of the tidal energy industry.

"The fresh injection of such a significant level of capital will provide a clear demonstration of our investors' strong commitment to the technology and the future opportunities for the business." DCNS expects to generate €1bn in revenues from its marine tidal energy business by 2025.

Sunday Indo Business

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