Investments, Presentation

Funding prospect for 2013?

With the dismal IPO and stock trends for renewable chemicals and biofuels last year, combined with biofuel/renewable energy regulatory uncertainties in the Western markets as well as continuous global economic/financial challenges — will investors be invigorated in 2013 to part with their precious green bucks?

January seems to have a good start as the biodiesel industry gave a sigh of relief today when the US House of Representatives cleared a year-end fiscal package that reinstates the $1/gal biodiesel tax incentive through the end of 2013 and retroactive to January 1, 2012. The Renewable Fuels Association (RFA) also noted the extension of three key ethanol related tax credits with the passage of the fiscal package in Congress.

Meanwhile, Gevo said today that it has repurchase up to $15m of its common stock over a one-year period with existing cash and cash equivalents on hand. The company believes its stock price is currently undervalued and that the repurchase is an opportunity to enhance value for their stockholders. The move seemed to excite investors as their stock as of January 2 rose 18% to $1.82 after the market closed.

According to this Bloomberg article, industry analysts such as from Raymond James & Associates, Piper Jaffray approve the move stating that the company is sending a positive signal about their credibility after Gevo announced the cutback of their bio-isobutanol production in late September.

December also saw funding announcements from Amyris, P2 Science, Proterro, and Soffinova Green Seed Fund/Solvay.

Amyris said it has completed a $42.25m private placement as the company sold 14,177,849 shares of its common stock to existing Amyris investors. The transaction included $37.25m in cash proceeds and the conversion by Total Gas and Power USA of $5m from an outstanding senior unsecured convertible promissory note.

Start-up firm P2 Science said it has raised $150,000 in funding provided by Connecticut Innovations. The company intends to use the capital for product development and pilot production. The specialty chemical company said it has developed a chemical process based on hybrid ozonolysis that enables the conversion of biomass into aldehydes for use in fragrances, flavors and into di-acids for use in certain cosmetics.

Sugar technology developer Proterro announced on December 17 that it has secured $3.5m in financing led by current investor Braemar Energy Ventures. The company said the financing will help propel development of its novel process for developing sucrose into the next stage.

“The funds also will enable us to accelerate the path to business partnerships, through piloting a full-scale photobioreactor and completing designs for our demonstration-scale facility,” said Proterro CEO Kef Kasdin.

On December 11, Belgian chemical firm Solvay said it has invested EUR 5m in the Green Seed Fund launched by Europe-based venture capital Sofinnova Partners. The Green Seed Fund, currently holding a fundraising round which first closed at EUR22.5m, is intended to finance European small-to-medium enterprises active in industrial biotechnologies.

Solvay said the company intents to significantly increase the proportion of renewable raw materials in its portfolio and therefore industrial biotechnology sector is important for the company.

Another Europe-based industrial biotechnology firm, Carbios, recently raised EUR3.3m from venture capital firm Truffle Capital. The company aims to develop industrial bioprocesses for plastic manufacture. French biotechnology company Deinove said it has also invested in Carbios as a shareholder. Terms of the partnership deal were not disclosed.

And in the biofuel sector, Propel Fuels recently secured $21m in funding, which the company said will help accelerate its expansion of alternative fuel retail stations that provide renewable fuels such as Flex Fuel E85 and biodiesel blends. Propel currently operates traditional fuel stations throughout California and Washington State, and plans for more than 200 stations for new and existing markets over the next two years that will include renewable fuel stations co-located with traditional fuel stations.

Fulcrum BioEnergy said it is proceeding toward closing financings totaling $175m to fund construction of its first municipal solid waste (MSW)-to-fuels plant called Sierra BioFuels Plant, as well as to fund development of future projects.

Fulcrum BioEnergy, by the way, also withdraw its IPO filing late last year citing challenging market environment for development stage companies. The company said it intends to pursue IPO in the future when the market conditions are more favorable.

If most of the commercialization promises geared for 2013 will come to fruition, I’m sure investors will shell out more. Therefore, 2013 is definitely a critical year for the renewable chemicals industry to prove itself that it can be a profitable industry for the next several years to come.

Finally, here is a very nice powerpoint slide from the Nova-Institut which condensed several bio-based investments worldwide.

About Doris de Guzman

Will Green Chemistry save the world or is it hype? Doris de Guzman examines alternative processing, new technology, R&D and other sustainability initiatives aimed at preventing pollution; replacing ingredients; and using renewable feedstocks in Green Chemistry. She has been covering the oleochemicals market for 15 years and spread her beat to inorganics, biofuels and green chemistry.

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