Whatâs Going On Here?Germanyâs Thyssenkrupp is thinking about listing its hydrogen business Uhde on the stock market, as if to prove that the gas really is greener on the Uhde side. What Does This Mean?Uhde â which is 66% owned by conglomerate Thyssenkrupp â builds plants that use renewable energy to produce hydrogen, which can then be fed into fuel cells to generate emission-free electricity. The gas can likewise be used to replace fossil fuels in industrial applications, like the manufacturing of steel and cement.
All that fits snugly into an increasingly eco-conscious landscape, and explains why thereâs growing investor interest in Uhdeâs hydrogen-based technologies. So Thyssenkrupp is looking to capitalize: the initial public offering â which could come as soon as the first quarter of next year â stands to value Uhde at as much as $5.7 billion. Why Should I Care?For markets: The âconglomerate discountâ in action.
If Uhde lists at $5.7 billion, that would make Thyssenkruppâs 66% stake in the company worth $3.8 billion. But Thyssenkrupp itself was worth $6.5 billion before the news broke, which implies investors were valuing the rest of its business at just $2.7 billion. Consider, then, that the rest of the business generated 99% of Thyssenkruppâs revenue last year, and you realize investors have been valuing the conglomerate at far less than the sum of its parts. No wonder they sent Thyssenkruppâs up 12% after the newsâŚ
The bigger picture: More clean energy, please.
Interest in hydrogen is about more than just sustainability: this yearâs surge in natural gas and oil prices has brought the need for diversified energy sources into even sharper focus. Especially given that the surge doesnât look like itâs going to drop off any time soon, with Trafigura â one of the worldâs biggest oil trading firms â saying on Tuesday that itâs expecting the price of oil to climb from around $80 a barrel nowadays to $100 in the long term. | 