San Francisco-based algae company Solazyme (Nasdaq: SZYM) had a strong IPO on Friday, selling 11 million shares at $18 each to raise about $198 million.
The IPO is noteworthy because Solazyme is the first algae-to-fuels company of real stature to list on a major public market.
In the first day of trading shares rose above $21 before closing at $20.71. The price continud to climb in today’s trading to an afternoon price of $22.50.
The strong early performance also shows there’s continued investor interest in cleantech companies. Solazyme’s IPO follows on the success of two other bio-energy IPO’s in the last year: Gevo (Nasdaq: GEVO) and Amyris (Nasdaq: AMRS).
Researchers have been promising great things for algae as a renewable feedstock. Algae grows faster than other bio feedstocks and it uses fewer resources. Advocates say it has the potential to produce up to 5,000 gallons of renewable oil a year on a single acre of land.
However, separating the oil from the algae has proven to be a difficult, expensive process that continues to hinder widespread adoption of algae to produce even simple fuels like biodiesel.
Unlike other algae-based biofuel companies, Solazyme does not grow algae using photosyntheses. Rather, they use a genetically modified strain that feeds on sugar in a closed fermentation process. This allows Solazyme to grow the algae in tanks.
Solazyme’s microalgae produce oils and biomaterials that can be tailored not only for biofuel production, but also as replacements for fossil petroleum and plant oils in a range of products ranging from clean fuels and chemicals, and from cosmetics to foods.
The company has partnerships with Unilever, the US Navy, Quantas Airlines, Dow Chemical and Chevron.
In January 2010, Solzayme received a $21.8 million grant from the Department of Energy to fund its first integrated algae refinery in Pennsylvania. The company hopes to launch additional commercial facilities in 2014 and 2015.
This adaptive organism may grow to provide:
A biomass of 50% proteins – energy used for foods,
Or a biomass with 60% lipids – oils used for biofuels,
Or with 90% carbohydrates – material to make paper
And with very little waste; about 10%