Why the Calix (ASX:CXL) share price is surging 20% to a new all-time high

Carbon Direct’s investment sees it take a 7% stake in subsidiary LEILAC Group.

| More on:
a man sits on a rocket propelled office chair and flies high above a city

Image source: Getty Images

The Calix Ltd (ASX: CXL) share price is shooting straight for the moon. At the time of writing, shares in the materials company are trading for an all-time high of $4.61 – up 20.37%. That’s despite the S&P/ASX 200 Index (ASX: XJO) being down 0.48%.

The positive price movement comes after the company announced Carbon Direct Capital invested 15 million euros into one of its subsidiaries.

Let’s take a closer look at today’s news.

Calix share price rises on new investment

In a statement to the ASX, Calix says it has received a 15 million euro investment in its subsidiary LEILAC Group. The investor, Carbon Direct – which Calix describes as “one of the world’s leading decarbonisation investors” – will take a 6.98% stake in the business. LEILAC Group is focused on carbon dioxide capture technology.

As part of the deal, Calix has entered into a licence agreement with the LEILAC Group where it will retain 30% of royalties earned by the LEILAC Group from the deployment of its technology. This will be regardless of Calix’s equity stake in LEILAC.

At the same time, LEILAC will become an autonomous business with its own management and board. All board members, bar one, will be Calix directors. The remaining member will be appointed by Carbon Direct.

LEILAC Group is the licensee of Calix’s Low Emissions Intensity Lime and Cement (LEILAC) CO2 capture technology. The investment into this technology is clearly buoying investors, judging by the rising Calix share price.

Management commentary

Calix CEO Phil Hodgson said the deal represented a “critical milestone” in Calix’s stated strategy of seeking equity “farm-ins”:

As each of these businesses become independent commercial entities, they will remain ‘joined at the hip’ technically with Calix, which will continue to support development of the core intellectual property. Over time, growing royalty income from these companies will also support the development of new applications of the IP and associated technologies.

The recent Intergovernmental Panel on Climate Change (IPCC) report was unequivocal in saying that to reach the stated 2030 goals on climate change, CO2 emissions have to be reduced. LEILAC Technology is an option that is being deployed now to meet this urgent need.

Carbon Direct founder and CEO Jonathan Goldberg added:

We are very impressed by the technical and commercial rigour of the LEILAC team, and plant partners are outspoken in their excitement about LEILAC. We are delighted to support Phil, Calix, and the LEILAC Group as they seek to scale LEILAC into cement and lime plants around the world.

Calix share price snapshot

Over the past 12 months, the Calix share price has increased 407%. Year-to-date, it has risen around 332%.

Calix has a market capitalisation of approximately $715 million.

Should you invest $1,000 in Calix right now?

Before you consider Calix, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Calix wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Record Highs