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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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

a man wearing a gold shirt smiles widely as he is engulfed in a shower of gold confetti falling from the sky. representing a new gold discovery by ASX mining share OzAurum Resources
ETFs

7 hugely popular ASX ETFs smashing new record highs on Wednesday

Do you own any of these lucky ASX ETFs?

Read more »

Man smiling at a laptop because of a rising share price.
Record Highs

This ASX 200 share is breaking records amid a massive $300 million investment

This ASX 200 share made a triumphant return to trading today.

Read more »

A woman on holiday stands with her arms outstretched joyously in an aeroplane cabin.
Travel Shares

Big ASX news: Qantas share price hits record high

Qantas is defying the market to fly to new heights this Wednesday...

Read more »

Three Archer Materials scientists wearing white coats and blue gloves dance together in their lab after making a discovery
Record Highs

Superstar ASX 200 healthcare stock snags record high amid $32 million deal

The second multi-million-dollar deal in less than two weeks.

Read more »

ETF written in gold with dollar signs on coin.
ETFs

5 popular ASX ETFs smashing new record highs today

Do you own any of these high-flying funds?

Read more »

Green stock market graph with a rising arrow symbolising a rising share price.
Record Highs

Boom! The ASX 200 just rocketed to new all-time highs

ASX 200 investors just sent the benchmark into uncharted territory.

Read more »

A US flag behind a graph, indicating investment in US shares
Record Highs

S&P 500 cracks another new record high: Can US stocks keep charging higher?

Investors just sent the S&P 500 to a new all-time high. Now what?

Read more »

Man smiling at a laptop because of a rising share price.
Index investing

Should you buy the Vanguard MSCI Index International Shares ETF (VGS) at all-time ASX highs?

Is it too late to buy this index fund?

Read more »