ABB E-mobility: charge point maker swerves public markets for cash call

Change is unstoppable in the real world even if stock market enthusiasm for growth companies is waning. ABB has therefore relied on private capital to invest SFr200m in new shares of its e-mobility division, valuing the business at $2.4bn.

Mass electric vehicle adoption remains key to decarbonisation. Charging infrastructure is indispensable to this. The role of ABB E-mobility is making charging points for network operators.

Ikea owner Interogo is among new investors that now own 8 per cent of the venture. ABB had hoped to raise triple the cash from an initial public offering for the division. But the Swiss-Swedish conglomerate postponed a demerger this summer because markets were weak.

Annual sales of about $500mn make ABB E-mobility one of Europe’s largest equipment manufacturers. Two trends suggest it may yet join public markets and fulfil the role of consolidator envisaged by ABB.

Market growth is supercharged. Operators may have installed 43m charging points by 2030, according to Jefferies, seven times more than today. There is a gold rush into the sector. Everyone from start-ups to energy producers and established equipment manufacturers are staking a claim.

Public markets have already done a rough sorting job. Businesses that run charging networks have come out on top because they can offer the promise of lucrative recurring revenues from electricity sales. Although profits are still scant, these businesses trade on around 7 times forward sales.

Listed manufacturers such as Alfen and Wallbox trade at 3 and 3.6 times forward sales respectively. ABB’s placing values the business a little below the latter.

Equipment makers have a big growth opportunity and some obstacles along the way. There is little scope for product differentiation, whether in fast chargers for public places or slower chargers for homes. Growth will decelerate fast after chargers become widespread.

Meanwhile, there is a cyclical drag from high electricity prices and weaker EV sales.

Consolidation will inevitably follow. To play its part, ABB E-mobility will need quoted shares as a takeover currency and proof of its status. Private financings are no more than a stop-gap solution.

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