Since early 2021, Koch's environment picks have posted an average loss of 58% on a cap-rated basis, Barron’s calculates.
After long disputing the climate impact of the fossil fuels it refined, Koch Industries took a flier on zero-emissions a few years ago. A new unit called Koch Strategic Platforms, or KSP, quickly bet over $1 billion on start-ups targeting lithium, batteries, and lithium-battery systems.
Most everyone has lost money on clean-energy stocks since early 2021. The iShares Global Clean Energy exchange-traded fund is down 56% over that period, hurt by rising interest rates and changing prices. Koch Strategic bought into the sector at the peak of the SPAC bubble, when investors put giddy valuations on unproven businesses and technologies. The battery companies that Koch picked had all of these characteristics.
For decades, the Wichita, Kan.–based Koch conglomerate was best known for fighting regulation of its petrochemical operations and funding conservative causes favored by 88-year-old Chairman Charles Koch and his brother David. In interviews, Charles Koch now agrees that global warming is occurring, and says that his company is a leader in carbon capture. Koch Industries began diversifying from fossil fuels long ago.
KSP wasted no time putting money to work. In January 2021, the Koch venture agreed to become the largest investor in a $600 million private placement by a SPAC that was merging with a Norwegian battery start-up called Freyr. Bezdek said Koch saw “immense potential” in Freyr’s business. Sales grew by 65% in Aspen’s September quarter, and the company hopes to see positive cash flow from operations next year. Those hopes have lifted Aspen stock from an August low of $5.50 to a recent $8.86.
The stock didn’t do well. One reason may be a March 2022 report by the Texas hedge fund Blue Orca Capital that raised questions about Li-Cycle’s accounting and capital requirements. Defending itself against a shareholder suit that piggybacked on the short seller’s report, Li-Cycle said the allegations were without merit.
Short reports by Blue Orca and Hindenburg Research detailed their concerns about the company’s lithium extraction process and its origins in Vancouver’s wild penny stock market. Standard Lithium defended its technology’s value but didn’t address the other criticisms.
Koch Industries Green Investments Start-Ups Lithium Batteries Electric Vehicles Spacs
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