Whilst the constituent companies of the Global Leaders portfolio are, for the most part, well established, they are also masters of adaption.


Adaption can often be regarded as a series of defensive measures to address competition but it is as easily understood, in the context of companies that outperform endemic growth rates, as grasping new and developing opportunities.

In this Deep Dive series we identify developing growth vectors for companies in the portfolio. We define growth vectors as elements of each companies’ business that will generate super-normal (that is above the endemic growth rate of a sector) for at least the next 10 years.

Hydrogen is fast becoming a key growth area for Linde, due to the company’s existing compatible industrial gas operations and its evolving credibility as a potential solution to key hydrocarbon challenges.

Through incumbent synergies, Linde has established a US$2+ billion revenue business unit, spread across the entire hydrogen value chain, holding near 200 hydrogen fuelling stations and 80 electrolysis assets worldwide. Most recently, Linde has identified an
US$10bn hydrogen investment opportunity with scope for further investment, dependent on scalability and double-digit IRR potential. These funds are due to be deployed across the opportunity set, defined by their three-pronged energy transformation framework:

1. Short term – Decarbonising hydrocarbon fuels through currently available technical processes such as carbon sequestration, oxy combustion, and dry reforming, to drive the decarbonisation consumer operations.

2. Medium term – Replacing combustion-based hydrocarbon fuels with hydrogen-based fuels and/or ammonia. Whilst Linde already maintains a leading share in hydrogen-based fuel substitutes, through servicing rocket RP-1, broader adoption will dependent upon wider technical advancement in engine, fuel injection, drive train, and fuel storage systems. Once feasible, Linde is well positioned to capitalise via it’s US$100bn of pre-existing compatible assets.

3. Long term – Electrification of the economy. Whilst the most significant vector of change, this is also the most complex. Hydrogen should pose solutions to the renewable intermittency issue through acting as a superior medium for transport and storage. However, grid-scale electrolyser viability is a key challenge. Despite this, Linde has pre-emptively instituted itself through its minority acquisition and partnership with electrolyser leader ITM power.

Forecasts indicate a 10.5% CAGR for hydrogen generation market through 2027. So far, Linde’s sustainable hydrogen activities are largely expenses through capacity development, with US$33bn deployed in hydrogen specific or compatible assets. However, once technically viable, Linde’s ecosystem will allow it to retain a leading market share, providing lower-risk exposure to the industry, relative to the more speculative pure-plays competitors.

This Journal is taken from the Cerno Global Leaders Investment Report – Q1 2023, which can be read in full here.

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