Biofuels have returned to favour in the US with two large IPOs in the second quarter of the year - bringing the total number of significant US biofuel IPOs since last April to five.
This year’s trio of biofuel IPOs follows on from two in 2010. Amyris raised $84.8 million last September and has seen its shares soar by 75% since then. Amyris focuses on speciality chemical and next generation transportation fuels using sugarcane as its primary feedstock. Shares in Codexis, listed in April 2010, haven’t fared so well, trade 24% below the issue price.
However, it’s certainly fair to say that confidence has returned to the biofuel sector following a number of years when it remained out of favour. This time round, the biofuel story has changed. Four or five years ago US biofuel companies were raising funds to build corn ethanol production plants, whereas the recent arrivals are the result of years of research financed by venture capitalists into next generation biofuel technology - often with niche applications such as jet fuel.
Solazyme Inc., which has developed a biofuel technology based on genetically modified algae, raised $198 million at a price of $18 per share in May. The shares rose to over $20 on the first day of dealing and ended the quarter at $23.7, over 30% ahead of the issue price. Solazyme is valued at almost $1.5 billion.
Shares in KiOR Inc., which listed on NASDAQ in June, were priced at almost 30% below the expected range, at $15. KiOR, which raised $150 million, has developed a technology to manufacture ‘biocrude’ oil from biomass sources such as woodchips. The company, which is valued at over $1.5 billion, has been described as more comparable to an oil refining company than to a biotech company - which contrasts with Solazyme, and some of the other recently listed companies in the biofuel sector.
KiOR has offtake agreements in place with a Chevron/Weyerhaeuser joint venture, Catchlight Energy, to supply its crude oil for processing.
The Solazyme and KiOR IPOs followed on the heels of Gevo Inc., which listed in February of this year, raising $95.7 million. Gevo develops biobutanol fuels for diesel and jet markets and green chemicals.
Biofuels dominate IPO market | IPO month | IPO share price (US$) | Share price end June 2011 (US$) | % change since IPO | Funds raised (US$m) | Market Cap (US$m) |
Codexis Inc. (CDXS:US) | Apr-10 | 13 | 9.83 | -24.4 | 78 | 333 |
Amyris Inc. (AMRS:US) | Sep-10 | 16 | 28.09 | 75.6 | 85 | 1158 |
Gevo Inc. (GEVO:US) | Feb-11 | 15 | 16.4 | 9.3 | 96 | 480 |
Solazyme Inc. (SZYM:US) | May-11 | 18 | 23.71 | 31.7 | 198 | 1475 |
KiOR Inc. (KIOR:US) | Jun-11 | 15 | 15.13 | 0.9 | 150 | 1504 |
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