There are many noteworthy items in our daily report today, but we focus on two.
First is the now headlong rush to exploit ESG friendly public market valuations with public offerings and SPAC based listings. The poster child is likely Danimer Scientific, which is now up 6.5x versus the SPAC share price when the deal was first announced. The company now has a $5.5 billion enterprise value, which is 32x expected 2025 EBITDA (a forecast very dependent on a facility that the company has not yet build and has yet to announce a location for. Readers of our ESG and climate work will know that we have concerns about how broad the adoption of biodegradable polymers will be and the subject was covered in detail in yesterday’s ESG and Climate report. Still, Daminer’s valuation provides an attractive lure for other companies in the clean energy and materials space and we believe that it will drive transactions that involve less tested technologies than Danimer’s in more speculative end markets. Some of these new IPO’s or SPAC based deals will likely work, while others could fail badly – we would advise investors to adopt a basket approach and to expect volatility.
Separately, in our 10th ESG and Climate report, we highlighted the comprehensive reporting that Olin had provided with its 4Q 2020 results. While we praised Olin for showing some much-needed leadership in the US chemical space we raised the likelihood that investors were not only going to embrace this more extensive reporting but would demand more of it, and more frequently than what is provided in an annual sustainability report and expect more timely information. The Wall Street Journal article highlighted below follows this thread.
There are several additional important topics highlighted today – some we have strong opinions on and have covered in detail in prior work and cover subjects that we are engaged with daily one on one with clients, and others that will form the basis for future analysis.
Please contact us to learn more.
