Kareem Afzal, is the second-generation leader of PDC Machines, which manufacturers standard and custom-designed gas diaphragm compressors.
In the late 90s, the company sold its first compressor to a California company that runs a fleet of public transit buses. Their zero emission buses were powered by compressed hydrogen that can be pumped with PDC’s machines.
“At that time, we thought, ‘This demonstration market could be something in the future, we would pay particular attention to it as these demonstration projects took fold,” Afzal says.
So, PDC continued to refine its product to suit the market needs. By 2015, the material handling market, with its forklifts and large distribution centers, became a commercially viable standalone opportunity, while public transportation and delivery vehicles using hydrogen as a fuel took shape all over the world. PDC scaled with that market.
“Currently we have more than 50 percent of the marketplace for compression in this industry today. And really it's the hottest thing in energy,” he says. “So, energy companies are talking about it, governments of talking about using hydrogen as a pathway to decarbonize transportation in all of their forms, lots of different forms of industrial production.”
In March, PDC Machines got a $4.3 billion cumulative capital commitment from Arcline Investment Management. Afzal says this came because PDC saw the inflection point of the business possibly outstripping its ability to go it alone. And as the company looked out across its marketplace, it saw a lot of deals happening — acquisitions of peer companies or competitors by much larger organizations that were enabling companies to scale and meet this burgeoning market demand.
The partnership with Arcline enabled the family to remain part owners of the business, while the recapitalization also gave PDC access to enormous resources — capital and relationships — to help bring the business quickly to scale.
“The folks who scale first are going to be the real big successful companies of the future in the hydrogen business,” Afzal says. “Leveraging the talents and in the resources and the great skills of Arcline with PDC, we’re able to do that.”
Afzal spoke on the Smart Business Dealmakers Podcast about the company’s evolution into the market and how he expects the Arcline investment will help his business capitalize on the opportunity. Hit play to catch the full conversation.