PrintThree biofuels and biochemicals startups filed registration statements as a first step to becoming public companies—biofuels developers Mascoma, Fulcrum Bioenergy, and biochemical developer Elevance Renewable Sciences. They join six biorenewables companies already in the queue. All have proprietary technologies to make advanced fuels and specialty chemicals from renewable feedstocks that are ready to be commercialized. All hope to raise approximately $100 million to fund their scale-up activities, mainly the construction of their biorefineries, to begin to offer products. But they may well have to take haircuts to complete their deals, if they end up getting done at all.
A few months ago, biorenewable companies were all the rage, despite the fact that none had yet commercialized their technology. The price of oil was high, the market was on an upswing, and biorenewables were hot. Recent IPOs in the space—Gevo, Solazyme, and Kior—were completed at or above the companies’ target range.
But given the market downturn since the end of July, recently public companies in the biorenewables space have seen their fortunes turn for the worse. Of the six U.S. firms that have gone public since April 2010, including one in Canada, only two are trading above their offering price. The average return of the group from its initial offering has dropped more than 24 percent. In fact, the two companies that are above water—Amyris and KiOR—completed their offerings below their target range.
Elevance Renewables’ technology enables the company to transform bio-based oils, such as soy, palm, and canola, into specialty chemicals that are direct replacements for petroleum-based chemicals.
Mascoma’s consolidated bioprocessing technology involves an engineered microorganism that eliminates the need for costly enzymes in converting cellulosic feedstocks into ethanol.
Fulcrum BioEnergy is the latest company to put itself in the IP queue. The California-based company uses a plasma gasification process licensed from another biofuels company InEnTec to convert garbage to ethanol.
As alternatives to petroleum, these bio-based products are much more attractive when the price of oil is high. But oil prices have been dropping along with the rise in the possibility of a global recession, which would cut the demand for crude oil. After hitting a high of $114 a barrel in April, analysts expect oil prices to stay in the range of $75 to $90 dollars per barrel until economic uncertainty clears up. Given the recent political climate, that is not likely to happen soon.
Filing to go public and going public are two different things. These companies are all high risk and it remains to be seen whether or not they will be successful. The one certainty in their favor, however, is the fact that they compete on a par with oil, both in performance and price, without subsidies or incentives. The market is there if they succeed.
September 23, 2011
http://www.burrillreport.com/article-biorenewables_makers_file_to_go_public.html
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