Integrated primary vanadium producer and energy storage provider Bushveld Minerals’ subsidiary, Enerox Holdings, has acquired a further 65.1% stake in Enerox GmbH.
Enerox Holdings is a newly incorporated investment vehicle formed by a consortium of investors, including Bushveld Energy – an 84%-owned subsidiary of Bushveld Minerals.
The investment is in line with the company’s strategy of establishing a VRFB Investment Platform (VIP) to lead investments in vanadium redox flow battery (VRFB) original equipment manufacturers (OEMs) with attractive upside potential. The VIP is one of multiple avenues of partnering with OEMs.
- Bushveld Energy and its initial investments will play a catalyst role and mobilise additional capital from third party funders to establish an investment capital pool to support VRFB OEM growth.
- These partnerships support Bushveld Energy’s business model, that includes electrolyte manufacturing and rental, VRFB manufacturing and deployments.
- Bushveld Energy intends to own a minority interest in Enerox Holdings, in line with its strategy of holding minority positions in select VRFB OEMs and being a catalyst to mobilise third party financing and assist the scale up VRFB OEMs.
Rationale of the investment in Enerox
The Enerox VRFB product is one of the most widely deployed over the past 10 years, offering a unique value proposition in the industry. The company has a newly redesigned VRFB product orientated around a modular and stackable 40 ft container base configuration that increases standardisation to reduce costs of manufacturing, field installation and maintenance.
With a global customer base with over 130 field installations over the past 10 years across five continents, Enerox is expected to diversify Bushveld’s customer and revenue base with preferential vanadium supply rights into energy storage products to support Bushveld’s mining, processing and chemicals activities.
Under a separate agreement proposed to be entered into between Bushveld and Enerox, it is intended that Bushveld will be awarded a right of first refusal to supply vanadium products to Enerox on the same material terms as any other supplier. This would provide a future hedge to Bushveld’s position against volatility in the vanadium price once the VRFB market has developed.
Renegotiated investment terms
The original investment consortium, which first acquired 24.9% of the issued share capital of Enerox (and will transfer such shares to Enerox Holdings) and have already jointly invested €2.6 million into Enerox, have now, through EneroxHoldings, acquired an additional 65.1% in Enerox from CellCube Energy Storage Systems.
Under the agreement, Enerox Holdings will pay a nominal amount for the Enerox shares but provide a new secured shareholder loan facility of €3.7 million to Enerox. The shareholder loan facility is designed to provide working capital and funds for capital expenditure to enable Enerox to reach sustainable commercial production. The facility will be secured on certain assets of Enerox, although the security will be subordinated to security provided to Enerox’s current lender, FGP Protective Opportunity Master Fund SPC.
Enerox Holdings will hold 90% of the share capital in Enerox, In line with Bushveld Energy’s VIP strategy to hold minority investments in VRFB companies, it is seeking to procure third-party investors into Enerox Holdings to assume Bushveld Energy’s funding responsibilities in terms of the agreement.
Should Enerox Holdings not have funded Enerox an aggregate of €3.7 million by 31 December 2021, then the seller will have the right to buy back for nominal value such proportion of 39% of the share capital of Enerox as is equivalent to the shortfall in funding.
“This transaction is in line with our stated strategy to play a catalytic role in mobilising financing to scale up VRFB manufacturing capacity,” says Bushveld Minerals CEO Fortune Mojapelo.
“Despite the global challenges caused by the COVID-19 pandemic, the emerging push to combine efforts to stimulate the global economy and an accelerated energy transition to clean energy has made the timing of this investment ideal.
“Enerox is a leader in this space and with the injection of these new funds it will be able to strengthen its position and take advantage of further growth opportunities. It follows our investment into Invinity Energy Systems, which has performed exceptionally well. Thus, Bushveld continues its strategy of supporting growing VRFB companies, partnering with external investors to drive growth capital into the sector and ensuring the growth of vanadium demand in energy storage,” Mojapelo concludes.