Is Brenmiller Energy Ltd. IPO a Buy or Sell?

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Contributor, Benzinga
May 24, 2022
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  • Amid ugly price action in global equity markets, the energy sector has enjoyed tremendous (albeit cynical) upside.
  • Because of the disruptive forces that have plagued the international community, a renewed push toward energy independence suddenly erupted.
  • It’s possible that alternative energy providers can help mitigate the present crisis and forge a fresh path forward, though aspirational companies are always risky.

For every action, there is an equal and opposite reaction. Commonly known as Sir Isaac Newton’s third law of motion, this principle also applies to economic and societal dynamics. While globalization has thrust humanity to unprecedented heights, such inherent diversity of ideologies and aspirations invariably fosters conflict, exposing bare the vulnerabilities of interdependency. This concept is perhaps no more apparent in the energy sector, though it also presents potential opportunities undergirding the new listing of Brenmiller Energy Ltd.

Well before Russia’s deadly and unprovoked invasion of Ukraine, many geopolitical analysts raised alarm regarding western Europe’s increasing dependency on Russian energy inflows. Though projects such as Nord Stream 2 — a natural gas pipeline connecting Russia to Germany via the Baltic Sea — presented viable economic prospects, they only worked under a good-faith effort of rational cooperation. Unfortunately, this seemingly robust relationship eventually devolved into a dance with the devil.

Immediately following Russia’s “special military operation,” global policymakers recognized that they completely miscalculated the geopolitical roadmap. Not wanting to compound grave missteps with additional failure, western nations quickly accelerated sustainable energy initiatives. The issue is that while sentiment toward this wake-up call is generally unified, energy-dependent nations require solutions in the interim on the path to true self-resilience.

That’s where Brenmiller Energy comes into the center of the frame, storing energy when electricity costs are at their lowest and distributing power on demand for various industries, vital infrastructures and local communities. A compelling concept on paper, investors will need to deep-dive the pros and cons before making their final decision.

What Does Brenmiller Energy Do?

An advanced energy technology firm, Brenmiller Energy empowers industries and communities through its proprietary bGen thermal storage solution. An all-in-one platform encompassing thermal storage, heat exchange and steam generation innovations, the basic concept revolves around strategic energy accumulation and power distribution.

During off-peak hours when electricity costs are at their lowest, the bGen system accumulates charging energy from multiple sources, such as off-peak grid power along with renewable solutions like wind and solar. As well, the system corrals thermal energy from biomass, flue-gas and heat recovery from industrial applications.

Once collected, Brenmiller transfers this diverse pot of energy resources into a storage media. From there, the company delivers power on demand to its enterprise-level clients, helping to reduce costs since the initial acquisition of energy occurred during off-peak hours or via renewable platforms. Moreover, the use of renewables facilitates reductions in energy dependencies.

For prospective investors, Brenmiller offers these key advantages:

  • Pioneering status: The bGen thermal storage solution is unique to Brenmiller, enabling the company to address the pressing circumstances of contemporary energy needs. In addition, the geopolitical backdrop affords a free marketing opportunity to showcase what the bGen system can really do.
  • Force multiplication: One of the biggest impediments to renewable energy solutions is low capacity factor or the inability to reliably generate power during unideal conditions — such as when the sun isn’t shining or the wind isn’t blowing. Brenmiller aims to rectify this drawback by incorporating a wide mix of on-and-off grid energy sources.
  • Growing portfolio: Though Brenmiller is aspirational, it has plenty of rubber on the road thanks to a growing list of impressive partnerships. Perhaps most notably, Brenmiller is engaged in a joint effort with Enel (PINK: ENLAY) to process heat recovery solutions of exhaust gasses from existing generators.

Finally, with the international community realizing that energy infrastructure strategies can no longer tolerate myopia, Brenmiller may receive an enthusiastic response with its upcoming new public listing.

When is the Brenmiller Energy IPO Date?

A huge advantage for Brenmiller’s upcoming initial public offering (IPO) — or the first time a private enterprise distributes its equity shares to retail investors — is its underlying energy business. While most market subsegments are drowning in red ink, companies tied to power distribution have generally fared well.

Therefore, many eyes will focus on Brenmiller’s debut, which will hit the IPO calendar on May 24, 2022. Shares will trade on the Nasdaq exchange under the ticker symbol BNRG.

Unlike a traditional IPO, however, investors should recognize the distinct nuances associated with Brenmiller’s new listing. Primarily, the company is already a publicly traded entity, having made its debut in August 2017. Nevertheless, BNRG is classified as an IPO to American investors because it’s the first time the equity unit is available on the Nasdaq. Previously, Brenmiller launched on the Tel Aviv Stock Exchange (TASE).

In this context, Brenmiller isn’t truly an IPO. Therefore, BNRG lacks the hype machine associated with popular private enterprises that are releasing its equity shares for the first time. Put another way, you can easily look up the BNRG stock performance in the TASE, thus eliminating the mystery inherent in IPOs. Though this condition may be beneficial to conservative investors, you should note that the highest outright rewards often come from the highest risks.

Finally, according to Brenmiller’s Form F-1 disclosure with the U.S. Securities and Exchange Commission, the company will not raise new capital with the Nasdaq listing. However, some of Brenmiller’s shareholders may sell their shares as part of the deal.

What Analysts are Saying About Brenmiller Energy IPO

As a foreign-listed company that’s just making its debut to the U.S. audience, mainstream analysts have not yet weighed in on Brenmiller’s prospects. However, the energy firm’s risk-reward profile is similar to other advanced energy infrastructure businesses.

Mainly, Brenmiller’s core advantage stems from the force-multiplication principle or the practical actualization of renewable energy solutions. According to data compiled by the U.S. Energy Information Administration, wind and solar feature capacity factors of 35.4% and 24.9%, respectively. To put these figures into context, they’re the lowest among common energy sources. Coal plants feature a capacity factor of 35.4%, and nuclear energy has an average capacity factor of 92.7%.

But the beauty of Brenmiller’s bGen system is that it can leverage all renewable energy sources, thus mitigating their inherent deficiencies. As well, the proprietary technology can make productive use out of heat emissions from existing on-grid energy infrastructures, thus improving efficiencies across the entire spectrum.

Still, no investment is without drawbacks. The primary headwind blowing against BNRG stock is static or even negative recursiveness. While green energy is often billed as sustainable, in reality, its undergirding is often dirty. For instance, solar solutions require lithium, which itself imposes environmentally damaging extraction processes.

Further, wind turbines are also not harmless. Per the Office of Energy Efficiency & Renewable Energy, turbines kill birds and bats. Ecologically, both birds and bats are vital to the balance of lifeforms, preventing excessive growth of harmful insects and rodents. As well, these winged species are absolutely vital to pollination.

Stated differently, humans can’t afford resolving one crisis with the introduction of another.

Brenmiller Energy Financial History

As compelling as an investment may appear on paper, investors must conduct due diligence before moving forward. A significant step in this process is analyzing the financials. Unfortunately, Brenmiller finds itself lacking in this arena.

Per its Form F-1 disclosure, in 2020, Brenmiller generated no revenue, instead racking up a loss of $9.48 million. Last year, the company improved its standing, posting sales of $395,000. However, losses extended from the prior year’s result to $10.35 million, which is not the most encouraging sign, particularly as the U.S. economy battles against recessionary pressures.

Still, it would be remiss not to point out that Brenmiller has a relatively strong balance sheet. As of Dec. 31, 2021, the company features cash and equivalent holdings of nearly $8.3 million, with total assets measuring $14.6 million. On the other end, total liabilities come out to $9 million.

Brenmiller Energy Potential

As previously mentioned, Brenmiller isn’t strictly a true IPO because BNRG has been trading in the TASE since August 2017. This fact allows prospective investors to better gauge what its potential might be as a Nasdaq-listed entity. Frankly, the print isn’t encouraging as BNRG has lost nearly 49% of market value just prior to its U.S. debut.

Still, foreign publicly traded companies choose to list in U.S.-based exchanges because of their unrivaled size and exposure potential. Therefore, it would not be entirely fair to judge BNRG stock based purely on its performance in the TASE.

In addition, it’s also important to point out that the current geopolitical environment has suddenly bolstered Brenmiller’s relevance. Ultimately, then, interested buyers should treat BNRG as a fresh debut, conducting comprehensive research accordingly.

Where to Buy IPO Stocks

If you want to participate in Brenmiller Energy’s IPO, you’ll need to know how to buy stocks. But before you take that step, you must sign up for a brokerage account. Below is a list of best brokers to consider that offer IPOs.

BNRG Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.

BNRG Pre-IPO

Although no pre-IPO access exists for BNRG stock, those seeking early bird opportunities should consider opening an account with Freedom Finance.

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About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.