Next Hydrogen Solutions Inc., a Canadian designer and manufacturer of electrolyzers, plans to raise between CAD$20mn and CAD$30mn ($14.55mn to $21.83mn) through a non-brokered private placement of common shares priced at CAD$0.45 each. The transaction supports the company’s shift to a commercial phase and will fund the production and development of its NH150 and NH500 models.
A major investment from Smoothwater Capital
The transaction is led by Toronto-based investment firm Smoothwater Capital Corporation, which will become the largest shareholder of Next Hydrogen upon completion. Stephen Griggs, Chief Executive Officer of Smoothwater, will join the company as Executive Chair of the Board. More than CAD$20mn in commitments have already been secured, pending regulatory and shareholder approvals.
According to Stephen Griggs, this investment will enable Next Hydrogen to position itself as a commercially viable player capable of scaling up its electrolysis technology. He indicated that the company will focus on selling its equipment through industrial partners to optimise global distribution opportunities.
Towards a profitability-oriented growth model
Next Hydrogen’s President and Chief Executive Officer, Raveel Afzaal, stated that the capital raised marks a strategic step towards achieving positive cash flow. The proceeds will finance production ramp-up, finalisation of the NH500, and general working capital needs. The company will operate under a capital-light model by leveraging existing partnerships with major firms to accelerate global sales of its electrolyzers.
No intermediary commissions will be paid as part of this transaction, though CAD$50,000 in advisory fees will be settled in shares. In accordance with Canadian securities regulations, the issued securities will be subject to a four-month and one-day hold period.
Stock exchange approvals and creation of a control shareholder
The transaction remains subject to the approval of the TSX Venture Exchange (TSXV) and disinterested shareholders, due to the creation of a new control shareholder holding more than 20% of the voting rights. Investor rights agreements will be signed with the lead investors in the offering.
No securities will be offered in the United States unless registered or exempt under the Securities Act of 1933. While the company has not confirmed whether the maximum raise will be achieved, the existing commitments enhance the visibility of its near-term growth strategy.
