The catalyst manufacturing and process licensing business is attractive in that it offers opportunities for high returns on invested capital. The catalysts and process licenses help to generate economic value by enabling the production of fuels and chemicals in commercial world-scale production processes. As the world economy continues to grow, fuel specs get tighter, and more and more people lift themselves out of poverty, demand for these products is expected to grow. Small improvements in catalyst performance or process efficiency can generate attractive margins for the operator of such catalyst or process and thus the catalyst producer and process licensor can share in these benefits that they help to create for their customers.
This is not to say that the business is not competitive, in fact it is highly competitive and different players exhibit a strength on one field and a relative weakness in another field. Based on their IP, manufacturing base, and the expertise and foresight of their scientists and management different players develop in different directions. In the end different technical solutions are offered to the market to accomplish certain chemical conversions. While one solution (process license or catalyst solution) may be best for a particular feedstock, operating condition or product spec, the same solution may not be optimal for a slightly different feedstock and operating conditions. Thus, a range of different solutions is offered for the production of fuels and chemicals. It is up to the refinery or the chemicals plant to decide which solution is best for their particular situation. Catalyst producers and process licensors which offer the best solution most of the times will see their share of demand grow, while others may be less successful in that particular application. Investors are looking at the catalysts companies and asking themselves if they should invest in a particular publicly traded company or a smaller catalyst company based on their expectations for the future development of that company and the global industry.
Investors need a precise assessment of the value of the company that they buy into, and an assessment of the potential value of the company in the future. The future is uncertain so we prefer to establish some scenarios and define what might happen to the demand for catalysts and processes under in each of these scenarios. Since 2016, Catalyst Intelligence has assisted several investment companies with an assessment of the catalyst market, including fresh catalyst producers, catalyst service companies, and spent catalyst reclaim companies. Our contribution to the investor can range from a video call to answer specific questions, to a report about a segment of the industry (fresh catalysts, hydrocracking, residue conversion, FCC), to a review of the Information Memorandum on a specific company, to participation in the due-diligence team, and even post-acquisition integration.
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