Key points
- The Sparc Technologies share price exited a trading halt today and is currently down 12%, trading at $1.44
- The fall follows news hydrogen-giant Fortescue Future Industries is buying into the Sparc Hydrogen Joint Venture
- Under the deal announced today, both entities will end up with 36% of the venture, with the University of Adelaide holding the remaining 28%
The Sparc Technologies Ltd (ASX: SPN) share price is tumbling lower on Wednesday despite one of the ASX's biggest names taking a sizable stake in the company's hydrogen venture.
Fortescue Metals Group Limited's (ASX: FMG) hydrogen-focused renewable energy leg, Fortescue Future Industries (FFI), is set to snag up to 36% of the newly-formed Sparc Hydrogen Joint Venture.
Unfortunately, the market is reacting poorly to the news. At the time of writing, the Sparc Technologies share price is $1.44, 12.73% lower than its previous close. Meanwhile, the Fortescue Metals share price has gained 3.47%.
Let's take a closer look at the latest news from the technology company.
A quick recap: What is Sparc Hydrogen?
The Sparc Hydrogen Project is developing the thermo-photocatalysis process – whereby hydrogen is created from water using radiation from the sun.
Thus, it bypasses the need for other forms of renewable energy when creating green hydrogen.
Theoretically, only light energy, water, and a catalyst are needed in the process. However, no technology using the method has been commercialised.
Prior to FFI's entrance, Sparc held 72% of the venture while the University of Adelaide held the other 28%. The joint venture was first announced in October.
Sparc Technologies share price tumbles on joint venture news
The freshly-thawed Sparc Technologies share price is slipping lower despite a major hydrogen entity gaining an interest in Sparc Hydrogen.
Under the deal announced today, Fortescue Future Industries will initially be paying $1.8 million to get a 20% hold of the venture as part of its stage 1 funding. Sparc will issue the Sparc Hydrogen shares to FFI immediately.
Sparc Technologies will receive an approximately $512,000 reimbursement through FFI's initial funding contribution.
The following funding stage will see Sparc Technologies paying $1.025 million and Fortescue Future Industries putting forward $1.475 million.
That will see both entities with a 36% holding in Sparc Hydrogen. The university will continue to own 28% of the venture.
The market might believe Sparc Technologies is getting a raw deal, inspiring its share price to tumble today.
Though, both parties will ultimately end up putting forward $3,257,000 for their holding. Sparc Technologies' contribution will include three million shares given to the University of Adelaide and the University of Flinders.
Additionally, the university has provided all technology under development, including intellectual property, to Sparc Hydrogen under an exclusive licence.
What did management say?
Sparc Technologies chair Stephen Hunt commented on today's news:
Sparc is extremely excited to be working with a company of the calibre of FFI, which has demonstrated its credentials as being a world leading company in green hydrogen. FFI is very well placed to assist the development and commercialisation of Sparc Hydrogen's green hydrogen photocatalytic technology.
Fortescue Future Industries CEO Julie Shuttleworth responded to the deal:
Green hydrogen is a practical, implementable solution to decarbonise hard to abate sectors, including heavy industry. The research being undertaken by Sparc Hydrogen is important for FFI's growing technology portfolio as we develop technologies to lower emissions globally.
Sparc Technologies share price snapshot
Since the end of 2021, the Sparc Technologies share price has slid 11%.
Though, it's still 388% higher than it was this time last year.
