SK Group to invest $1.5B in Plug Power; strategic partnership and JV to accelerate H2 economy in Asia
Plug Power Inc., a leading provider of hydrogen fuel cell and fueling solutions enabling e-mobility, and SK Group, one of the leading South Korean business groups, intend to form a strategic partnership to accelerate hydrogen as an alternative energy source in Asian markets. Through this partnership, Plug Power and SK Group intend to provide hydrogen fuel cell systems, hydrogen fueling stations, and electrolyzers to the Korean and broader Asian markets.
In conjunction with this partnership, the companies have also entered into a definitive agreement for SK Group to make a $1.5-billion strategic investment in Plug Power and are announcing a plan to form a joint venture company in South Korea to support the rapidly growing Asian market.
The combination of SK Group’s significant presence and leadership throughout Asia’s energy industry and its strategic direction on portfolio transformation to green via hydrogen economy with Plug Power’s leadership in hydrogen fuel cell systems, fueling stations and green hydrogen generation represents a powerful team to accelerate the growth of hydrogen economy in Asian markets, the new partners said.
In January 2019, the South Korea government announced the Hydrogen Economy Roadmap through 2040, with ambitious goals, including:
More than 5MM tons of hydrogen per year;
More than 6MM fuel cell EVs;
1,200 H2 refilling stations;
15 GW of fuel cell power generation; and
A cumulative economic value of its hydrogen economy to reach ~$40 billion by 2040.
Plug Power has proven its ability to scale a hydrogen business in North America as a global leader in the hydrogen economy. The opportunity to partner with SK presents an attractive and timely opportunity to establish a foothold in this market with one of South Korea’s leading industrial conglomerates.
This investment represents the largest US clean energy PIPE (Private Investment in Public Equity) in the last 20 years (based on the PrivateRaise PIPE database for transactions that have closed and includes common stock, preferred stock, convertible preferred stock and convertible debt).
Under the terms of the investment, a US subsidiary of SK Group will make a $1.5-billion investment in Plug Power by acquiring approximately 51.4 million shares of common stock at a price of $29.2893 per share, the 30-day VWAP as of January 5th, 2021 at a zero percent discount. The investment is expected to represent an approximate 9.9% pro forma ownership stake in Plug Power.
The investment transaction is subject to customary closing conditions and regulatory approvals, and is expected to close in the first quarter of 2021. Morgan Stanley & Co. LLC is serving as Financial Advisor and Goodwin Procter LLP is acting as legal advisor to Plug Power.