Saudi Arabia contemplates buying a share in Thyssenkrupp

Saudi Arabia’s Public Investment Fund is contemplating buying a share in Thyssenkrupp AG’s hydrogen unit as the oil-rich country shifts to greener types of energy generation.

According to the sources, the sovereign wealth fund is in the early stages of considering a prospective investment in the engineering conglomerate’s Nucera division. They asked not to be identified because they were sharing sensitive information.

Thyssenkrupp is aiming to float Nucera, which might be worth up to 5 billion euros ($5.4 billion). Bloomberg News reported in January that it intends to keep controlling ownership in Nucera following any IPO.

The people added that discussions are still underway and that there is no assurance that PIF will proceed with an investment. Thyssenkrupp’s ambitions to seek an IPO of Nucera were confirmed by a spokeswoman, who declined to comment on potential Saudi interest. PIF’s spokesperson declined to comment.

Any agreement would help Saudi Arabia achieve its goal of becoming the world’s largest exporter of hydrogen, a critical component for reducing carbon emissions from carbon-intensive industrial operations and assisting the world’s transition to more sustainable energy consumption.

Nucera builds plants that produce hydrogen gas from renewable energy sources like solar and wind. When hydrogen is supplied into a fuel cell or burnt in a turbine, it transforms to power without emitting greenhouse gases, and it may also be utilized for energy storage.

Thyssenkrupp is already collaborating with Saudi Arabia on the construction of a green hydrogen plant that will power the $500 billion Neom megaprojects, which is being built on the country’s northwest Red Sea coast.

PIF is in the process of overhauling its investment portfolio in order to better prepare the world’s largest crude exporter for a post-oil future. It’s currently buying everything from football clubs to electric carmakers. It was once a quiet holding company for government investments that almost anyone outside the kingdom had heard of.

The unexpected rise in electricity and natural gas costs this year has highlighted the need for investment in more diversified energy sources. The impact of Russia’s war in Ukraine, a conflict that has virtually shut down the IPO market, has compounded this.