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CM-Equity AG is an angel investor for the North-America based Li-Cycle Corp. (Now Li-Cycle Holdings Corp.). The company was founded in 2016 and is an industry leader in lithium-ion battery resource recovery and recycling. CM-Equity had been a participant in funding for the company in its startup phase from 2017-2019, and will continue to remain a strong shareholder in the future.
Li-Cycle had announced that it has completed its previously announced business combination with Peridot Acquisition Corp. (“Peridot”) and trading began on the NYSE on August 11, 2021.
The business combination implies a pre-money equity valuation for Li-Cycle of $975 million and, when combined with the transaction proceeds, represents a combined company pro forma equity value of $1.55 billion. The transaction results in approximately $580 million of gross cash proceeds to Li-Cycle, after giving effect to redemptions, enabling the company to further proliferate its breakthrough commercial technology globally for the recycling of all types of lithium-ion batteries.
ASSET MANAGEMENT – EDITORIAL
In the past year 2020, Lufthansa, Germany’s flagship airline, suffered a severe setback due to the COVID-19 pandemic. The immense travel restrictions caused passenger numbers to fall by around -66% in 2020, resulting in a record loss of more than €6 bn for the Group. The share price also reacted significantly, and Lufthansa lost around -50% of its market value within two months. In the end, the German state had to step in as a minority shareholder (20 per cent), which gave Lufthansa a cash injection of about €9 bn, ensuring survival of the group.
As the vaccination campaign gathered momentum and hopes of normalization in the travel industry spread, the share rose to an interim high of around €12.50 by March 2021. But the emerging fear of the delta variant, as well as the faltering vaccination campaign, ultimately sent the share back into a downward trend. Now it has also become public that the German government wants to reduce its stake in the company by ¼ to around 15% at the preferential price of around €2.60. This means a tidy profit for the state, which should thus again increase its scope for further involvement in the context of the planned Lufthansa capital increase at the end of September. Due to the current poor market conditions, the Group is also dependent on a further state investment if the capital increase is to be completed successfully.
Given the current news situation surrounding the Lufthansa Group and the continuing negative trend of the share, the question remains open as to whether there can be any major impetus for the Lufthansa share before the German parliamentary elections in September. According to experts, the high level of state ownership in the Group and the airline’s strategic importance for German air traffic should make a possible insolvency of the company – even if the passenger load factor remains well below average – seem quite unlikely. Speculative investors might therefore be willing to make a medium-term turnaround bet with a recurring tranche investment in the Lufthansa share.
– Markus Polz, Asset Management at CM-Equity AG
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