Covering the renewable chemicals sector for the past several years, I’ve noticed that many of the investment announcements seem to increased usually in December, when I guess, private investors are more mellow and in a gift-giving mood.
Here are some recent announcements:
- Infinity Group, a cross-border, private equity platform has invested $4.2m in green biotech company BotanoCap, which develops green solutions intended to replace toxic chemical materials currently used by the agricultural, veterinary and household product industries. Applications include crop protection bio-pesticides, water treatment, natural disinfectants, anti-flea and tick for veterinary formulations and insect repellent, to name a few.
- Saudi Aramco Energy Ventures (SAEV) LLC has led a venture capital investment into Novomer. All existing Novomer investors also participated in the financing. SAEV’s investment will fund ongoing development of the technology platform as well as construction of a market development plant for Novomer’s CO2 technology, and the enhancement of Novomer’s sales and marketing organization.
- Bio-adipic acid developer Verdezyne has raised $6,003,970 as of November 26, 2013, as part of an $8 million funding round.
- Global Bioenergies has secured a EUR 5.7 million grant from the German Federal Ministry of Education and Research. The funding will finance the construction of its second industrial pilot plant on the Leuna refinery site, desinged for an isobutene production capacity of up to 100 tons/year. The pilot plant will combine two 5,000 liter fermenters and a complete purification system, mimicking all aspects of a commercial-scale plant.
- Calysta Energy has completed its series A financing round totaling $3 million led by Pangaea Ventures Ltd. Calysta intends to use the investment to advance development of biological routes to high value industrial chemicals and fuels based on methane from natural gas.
- Amyris agrees to sell senior convertible promissory notes in a private placement to Temasek, in conjunction with new investors affiliated with Wolverine Asset Management, for $28 million in cash proceeds. Amyris expects closing of the placement to occur on or about January 15, 2014. In a separate news, Amyris said it plans to produce this year its fragrance oil molecule for Firmenich from its own manufacturing facility in Brazil following recent successful scale-up production of its fragrance oil at a specialty contract manufacturer.
- France-based biopolymers developer Carbios has completed its IPO (initial public offering) at the Alternext Paris stock exchange, and was able to raised EUR 13.1 million. You can watch a youtube video of the listing on this link (unfortunately it is in French so I have no idea what they are saying). Carbios was founded in 2011 and offers competitive alternatives to plastics recycling in three key applications: polymer bio-recycling, biodegradability, and programmed polymer generation from waste materials.
- UK-based Econic Technologies, a developer of new catalyst technology for manufacturing polymers from waste CO2, has completed a GBP 5.1 million series A investment round with investors such as Imperial Innovations and Jetstream Capital. The funds will be used to further test and scale-up its Econic catalyst technology to be commercialized for polyurethane polyols and long-chain polymers.
- Malaysian Biotechnology Corporation (BiotechCorp) has collaborated with Malaysian Debt Ventures (MDV) to launch the Intellectual Property Financing Scheme (IPFS) as a source of collateral for funding alternatives for BioNexus Status companies. BiotechCorp currently has 229 BioNexus Status companies with approved investments of more than RM 3.2 billion ($973.7 million). The companies have contributed to the filing of nearly 220 IP applications.
There is an optimism in the air that 2014 will be a better year in terms of securing funding both from public and private investors. The renewable chemicals sector is gaining traction (and investments) from traditional chemical companies such as DSM, BASF, DuPont, Braskem, Dow Chemical, M&G Chemicals, Lanxess, Solvay, Evonik, AkzoNobel, Mitsubishi Chemical, Toray, Mitsui, PTT, etc., recognizing the commercial potential of several bio-based chemicals and materials.
As Jefferies analyst Laurence Alexander already mentioned, 2012-2015 marks the transition of renewable chemical companies into the commercialization phase. The pace of investments is expected to accelerate over the next few years as new process technologies are validated and new arbitrages are developed between the ag, fuel, chemical, and waste management value chains. By 2015, Alexander expects the first wave of commercial second-generation biorefineries to be scaled-up, with high-value niche specialty materials and “drop in” chemical building blocks likely having the most success.
There is also more near-term expectation of commercialization efforts in Southeast Asia and Brazil. Alexander expects more investor discussions targeting ROIC (preferably excluding subsidies), realized unit volume profitability, and integrated value chain economics. Companies with new techniques but unattractive cost positions is expected to struggle in obtaining financing. Companies who are in the public limelight such as Gevo, Amyris, Codexis, Metabolix, BioAmber, Solazyme, will continue to feel the consequent pressure on corporate cash flows. In fact, time is already ticking for some of these companies to be able to replenish their cash flow this year.