Car batteries: A charged investment

Invest in batteries? Sounds dull. Invest in Blue Solutions, a punt on electricity storage technology controlled by the Breton billionaire Vincent Bollore, and being deployed in electric-car rental schemes? Now that has some spark. A 10 per cent slice of the company will be floated next week on NYSE Euronext, and is said to be fully subscribed. If so, expect the 2.9m shares up for sale to price at the top of the €12-€14.50 offer range.

The elan with which this initial public offering is being presented would do a Parisian bonbonniere proud. Investors are being sold a battery maker - and a lossmaking one at that. Born from a Bollore family business that makes ultra-thin plastic films, Blue Solutions has developed a high-power "lithium metal polymer" technology.

With sites in France and Canada and 300 staff, it made an operating loss of €18m on €62m of sales last year. The intriguing bit is that the sales come mainly from Bluecar /Autolib, an electric-car-sharing scheme on trial in Paris since 2011 and set to expand to Lyon, Bordeaux and, incongruously, Indianapolis. A couple of cars caught fire recently, but Parisian vandals were blamed. Otherwise, pas de probleme after 23m kilometres driven, says Mr Bollore.

Blue Solutions, though, only gets options to acquire Bluecar - and six other potential customer companies - from the Bollore group between 2016 and 2018. Meantime, its batteries will be sold to Bluecar at set prices. So, as more cities bring on car schemes, the company is predicting trebled volumes, at 3,000 units, in 2014 and sales of €100m-plus. Profits are forecast to hit break-even in the second half (before interest, tax, depreciation and amortisation).

Whether this works out is anyone's guess: Mr Bollore admits it could all be very profitable or a disaster. And much hinges on the Bollore group's continued funding of the applications companies, which could absorb €1bn between 2013 and 2017.

It is easy to see why investors might be tempted. Shares in US electric-car maker Tesla have trebled this year as it has moved into profit, giving it a $20bn market pricetag. It makes Blue Solutions' suggested €400m valuation look modest.

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