Industrial group Air Liquide explores sale of biomethane assets, sources say

Industrial gases giant Air Liquide is reportedly exploring the sale of its global biomethane assets, potentially valued at €500 million including debt, with JPMorgan advising. This strategic divestment aims to refocus the company on its core industrial gas supply and healthcare businesses. The move comes as the biomethane sector, while attracting significant European investment and projected for long-term growth by the IEA, has seen recent production growth slowdowns and a revised downward forecast for total biogas demand by 2040, presenting a mixed market outlook for the assets.

Analysis

Air Liquide is reportedly exploring a strategic divestment of its global biomethane assets, a move aimed at sharpening its focus on the core industrial gas supply and healthcare businesses. The potential sale, advised by JPMorgan, could yield approximately €500 million and involves 29 production units across Europe, China, and the U.S. This decision occurs within a mixed market context for biomethane. While the International Energy Agency (IEA) projects a fivefold increase in demand by 2035 and the sector attracted €28 billion in European investment in 2024, there are also signs of cooling. These include a slowdown in European production growth in the first quarter of 2025 and a 15% downward revision by the IEA to its 2040 total biogas demand forecast, citing weaker growth in emerging markets. Air Liquide's potential exit appears to be a calculated move to capitalize on current investor interest while reallocating capital to its primary operations, effectively shedding a non-core business line amid growing uncertainty about its long-term growth trajectory relative to other opportunities.

Key Decisions for Investors

• For Air Liquide investors, this potential divestment should be viewed as a positive strategic action, demonstrating management's commitment to portfolio optimization and unlocking capital for its higher-margin core segments.
• Investors considering the broader renewable energy space should monitor this transaction as a key indicator of private market valuations for biomethane assets, weighing the strong long-term IEA growth forecast against recent production slowdowns.
• Potential acquirers must conduct thorough due diligence on the asset portfolio, particularly the geographic mix, to assess exposure to the robust European market versus the slower-growing emerging markets noted by the IEA.