Advent CEO Vasilis Gregoriou
Vasilis Gregoriou wants zero emissions, carbon-neutral power for the automobile, aviation and power-generation markets. The CEO of Advent Technologies Inc., which makes fuel cells and components that convert hydrogen and other renewable fuels into electricity, is now in a position to do just that.
The company agreed to go public through a merger with a SPAC called AMCI Acquisition Corp. (Nasdaq: AMCI) that values Advent at $358 million, including debt. The transaction is expected to close in the fourth quarter of 2020 or early 2021, subject to approval by shareholders in both companies. The post-closing company will be named Advent Technologies Holdings, Inc. and will be listed on the Nasdaq.
In an interview with IPO Edge, Mr. Gregoriou said the deal will provide capital for the business to continue its rapid growth. The full interview is below:
IPO Edge: What is Advent?
Put simply, we make the critical component that impacts fuel cell performance, so we are a core part of the hydrogen economy value chain.
We are focused on our high-temp fuel cell technology, which has substantial advantages over the existing low-temp technology and is backed by over 50 international patents. These advantages are numerous, but boil down into two critical elements: (i) fuel flexibility and (ii) higher operating temperature. These substantially widen the number of applications and markets for our products compared to the existing low-temp technology. We already have applications across several high-growth markets, including heavy-duty automotive, portable power, off-grid power and aviation. All of these markets represent substantial revenue opportunities for Advent.
The world is changing rapidly and we believe that the fuel cell will replace the internal combustion engine, diesel generators and jet engines. With that in mind, we will play a critical role in making the world decarbonize faster. We are very excited about the work that we are doing, and we have customers already deploying commercial products powered by our technology.
IPO Edge: How do you fit into the broader fuel cell space?
Incumbent, low-temperature fuel cell technology is limited by two things: (i) the fuel it can take, and (ii) the temperature at which it can operate. It needs 99.99{efe5d79870c08482e17ab0c97855f89429dac5f22c46026d3ca83573faec2208} hydrogen to work, which limits its application to those environments where 99.99{efe5d79870c08482e17ab0c97855f89429dac5f22c46026d3ca83573faec2208} hydrogen is readily available. It’s fine for buses, trains and forklift trucks which always return to the same hub. But making 99.99{efe5d79870c08482e17ab0c97855f89429dac5f22c46026d3ca83573faec2208} hydrogen available for applications beyond those niche markets is a $15 trillion infrastructure challenge that will take decades to solve.
Our high-temp technology enables the fuel cell to run on a lower grade hydrogen, which means it can use hydrogen-carrying fuels such as natural gas or methanol, hydrogen and e-fuels. This opens up all of those markets where 99.99{efe5d79870c08482e17ab0c97855f89429dac5f22c46026d3ca83573faec2208} hydrogen is not readily available – such as off-grid applications and mass transportation.
Our technology is also more resilient than its predecessors, meaning that it can operate in any relevant temperature and environmental condition – leading to longer lifetimes and lower total cost of ownership.
We have a unique market position in the fuel cell value chain, in that we own the IP around not just the design of the fuel cell system and the critical component that we manufacture, but also around the core materials that give that component its characteristics. We are both a technology and a manufacturing company: our expertise in electrochemistry, materials and manufacturing enables us to be vertically integrated across the whole value chain, embedding us with our customers – the OEMs themselves.
Our core revenue stream is from selling the critical components (known as the “Membrane Electrode Assembly, or MEA”), but we also make money from engineering fees, where we design the overall systems with our customers, and from licensing our technology for the final fuel cell itself. We become an integral part of our customers’ processes, providing recurring revenues and high-quality earnings.
IPO Edge: Why should investors look at Advent versus other companies in the space?
We offer two key advantages over other companies in the space. First, our technology opens up new markets, like aviation, that are not accessible to other fuel cell companies. Next, we offer investors broad exposure to the entire hydrogen economy and the transition towards zero-carbon power generation because we are not reliant on one customer, one application or one market. In addition, because we are vertically integrated, we occupy a strong position in the value chain which enables us to maintain our profitability while growing our market share.
In terms of the technology itself, because our MEAs can utilize existing and next generation hydrogen bearing fuels, we can effectively bring fuel cell technology into every part of the globe. The issue with only being able to utilize pure hydrogen is the massive cost of infrastructure that is needed, with some estimates as much as $15 trillion globally. We solve that problem.
Today, fuel cell original equipment manufacturers (OEMs), in any market, can use our technology without waiting for new hydrogen infrastructure. Tomorrow, in a new green hydrogen era, the same high-temp technology minimizes the hydrogen infrastructure costs by continuing to utilize an upgraded existing infrastructure system.
Further, Advent’s MEAs can be used in a wider variety of operating environments because they run at higher temperatures and do not use water to conduct electricity. Because we are a “PEM” based fuel cell, we can design our MEAs to meet the end user’s needs from energy output, size and balance of plant perspective. These attributes allow Advent to work with its customers to design, engineer and develop the most efficient fuel cell possible. The applications are endless, and so are our potential market opportunities.
In addition, our leading position with partners like the Department of Energy, Los Alamos, Brookhaven and BASF gives us a very competitive position in the development value chain. Entering the public markets will allow us to continue to develop these relationships along with other key OEMs that are seeing their business models rapidly evolve to reduce their carbon footprint and utilize greener fuels.
IPO Edge: How exactly do you plan to grow and become profitable?
We have significant momentum across our business. First, Advent’s MEA products are already being used and tested for use by top-tier customers in the USA, China, India, Germany and France, among other key markets. Our technology’s initial applications were in the defense and aerospace industries, but looking forward we are scaling-up based on current and future customers’ needs in industries such as automotive, aviation, marine and off-grid power.
Second, we have a platform technology – a highly-scalable, high-margin product for multiple markets. Our value proposition is to complement our customers’ engineering and design instead of trying to compete with these customers. We will work to embed our knowledge and design, along with our MEAs, into their systems. This will allow us to not only sell our core MEAs, which we will mass produce, but also license the system technology across a number of end use markets.
Finally, we have significant market opportunities, beyond fuel cells, as our materials apply across electrochemistry applications. We already have customers in the energy storage (solar and wind) market, and great potential in the green hydrogen production market.
IPO Edge: Has your business been impacted by COVID-19?
Despite everything going on in the world right now, the mandate to replace diesel and cut greenhouse gases is progressing at full speed globally. We have a variable cost-structure and can be very responsive to different economic scenarios. Unlike many peers in the energy transition technology space, we have good visibility of revenues from our existing customers. We view our customers as partners and our close relationships with them allow us to understand their future needs, giving us confidence in our liquidity position and ability to manage costs.
Our product development activities, which will be funded by the proceeds of this transaction, are modular in nature and we do not anticipate entering long-term capital or debt commitments in the near future.
IPO Edge: Why is now the right time to go public?
Almost every industry-leading country in the world is announcing multi-billion dollar hydrogen plans this year.
Furthermore, most Tier-1 and major OEM manufacturers are making plans for the future that look towards the hydrogen economy to achieve their decarbonization goals. We receive multiple inquiries from industry leading OEMs weekly and have signed dozens of NDAs to work with these firms on an ongoing basis. We continue to develop relationships with these companies. By completing this transaction, will have the capital to scale up our design, engineering and production capabilities to meet the needs of our partners going forward.
The market of electrification is immense – for each GW of power production we provide to our customers, we expect to generate $100m in revenue.
IPO Edge: Obviously, there is a wave of SPACS happening this year – why did this path to going public make sense for Advent?
I mentioned timing being important. The acceleration and immediate market access that a SPAC provides made this the right choice for Advent.
AMCI’s focus on pursuing investments in business sectors critical to the growing urbanization and infrastructure needs of the world aligns well with Advent’s business. And Advent has a proven, scalable business model that delivers consistent and recurring revenue, which was attractive to AMCI.
The success of this transaction will provide the capital needed for our business to continue its rapid growth and reach our potential. Beyond capital, being one of a handful of public companies in the fuel cell sector will increase our visibility providing its own set of benefits.
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