Why did an Israeli energy storage company see its value fall from $700 million to $30 million?
Why did an Israeli energy storage company see its value fall from $700 million to $30 million?
The CEO of Augwind, Allon Raveh, recently announced his resignation after 13 months in the position, which comes on the back of the continued collapse in the company's market cap from around $700 million in August 2020 to $30 million
The drop in the stock price of Israeli energy storage company Augwind is taking its toll on the company's executives. After 13 months in the position, Augwind’s CEO, Allon Raveh, has announced his resignation, a mere two weeks after the resignation of the company's chairman, Moshe Kaplinsky, following a short term of only nine months.
Augwind develops innovative solutions for energy efficiency and energy storage. The company’s proprietary AirX technology offers a unique method and process for underground air storage at high pressure in a safe, cost-effective manner.
It is not all bad news for Augwind, which also announced that it has entered into an agreement with Israel’s Electric Company (IEC) to install a system at the Rutenberg Power Station in Ashkelon in exchange for $2 million (7.5 million NIS). Following the agreement, the company's stock jumped 7.5% on Thursday.
Raveh began serving as the CEO of the renewable energy company in January 2022 when the company's market valuation was already in a free-fall. After peaking at a valuation of around $700 million (NIS 2.5 billion) in early August 2020, the market cap was at $280 million (NIS 1 billion) as he took charge of the company. Raveh was unable to stop the drop and by the end of November 2022, the company's valuation reached a low of $25 million (NIS 87 million). Since then, the share price has experienced a partial correction of 20% and Augwind's value reached $30 million (NIS 105 million NIS), around 10% of its valuation when Raveh began his role.
Raveh, who previously served as VP at the real estate and infrastructure giant Shikun & Binui and as CEO of its subsidiary Shikun & Binui Energy, replaced the company's founder Or Yogev, who moved to the position of CTO. The terms of his deal included bonuses at a cost of $1.7 million (NIS 6.3 million), a fixed salary of $500K (NIS 1.8 million), a bonus of $500K (NIS 1.8 million) and capital compensation of $760K (NIS 2.7 million NIS).
In practice, he received less, since 43% of the grant's value was conditioned on the company's issuance on a stock exchange outside of Israel - a condition that was not met; And even more so because the 350,000 options he received, whose exercise price was set at $16.6 (NIS 59 NIS) and $35.2 (NIS 125) per option, remained far out of the money following the drop in the stock's valuation. The 39,000 additional options he received last August at an exercise price of $3.6 (NIS 13) per share, as part of a package in which his fixed salary was cut by 10%, also remained out of the money.
"I am ending my tenure with a sense of fulfillment after making a significant contribution to the company," Raveh told Calcalist. "The company is at a different place than it was when I began and now has a clear plan according to which it can move forward. During my tenure, I helped focus the company and built an updated strategy for it, with an emphasis on large projects such as the one that was signed with the IEC alongside a reduction in manpower and the adjustment of resources in order for the company to have enough capital for continued development. I received full backing from the board of directors all along and the decision to terminate the position was mine."
Raveh also stated: "I believe that Augwind's potential is high and if the company will manage its activities properly alongside managing investors' expectations, it will reach high achievements. I intend to continue working in the field of renewable energy." In his letter to the board of directors, Raveh reasoned that it would be right for him to leave his position against the background of his high salary conditions and the need to reduce Augwind's current costs. Similarly, Chairman Kaplinsky's resignation two weeks prior was explained as the completion of the cutback program he led.
Augwind operates in two fields: energy efficiency through the development and sale of a high-pressure gas compression system (AirSmart) that enables better energy utilization in factories and savings of up to 40% of costs related to operating air compression systems, and is already in use by several factories in Israel and Italy. The second field is energy storage through a system called AirBattery which is based on the gas compression system, and which has not yet been put to use commercially.
Augwind entered the Tel Aviv Stock Exchange as a result of a merger in 2019. Its total revenues between 2019-2021 were less than $5.6 million (NIS 20 million) and it recorded a combined loss of $43 million (NIS 153 million). In the first nine months of 2022, the company recorded revenues of $1.1 million (NIS 4 million) and a loss of $14 million (NIS 49 million).
