Renewable Energy Group Goes Public, First IPO This Year

Biodiesel manufacturer Renewable Energy Group Inc. (Nasdaq: REGI) is the first cleantech company to hit the public markets this year.

Based in Iowa, REGI makes biodiesel for cars and trucks from feedstocks like animal waste fat, used cooking oil, waste corn oil and soybean oil. The company, which hasn’t posted a profit since 2008, hopes to raise $108 million in tomorrow’s IPO.

REGI plans to use the proceeds to buy a factory it’s currently leasing and to invest in new processing technologies, reports Bloomberg.

The company’s net income for the first nine months of 2011 was $781,000, with annual net losses of $106 million from 2008-2010.

In its filing, REGI notes that the price of US biodiesel has been falling since 2008 because of anti-dumping duties imposed by the European Union, the global financial crisis, and higher costs for soybean oil.

Besides higher prices for soybean oil, REGI’s found it difficult to lock in good prices for other feedstocks. The markets for used cooking oil and fats are in the very early stages – it’s not possible yet to create contracts at a fixed price.

The company benefits from the US Renewable Fuel Standard, which requires oil companies to blend 36 billion gallons of biofuels with conventional petroleum fuels by 2022. 1 billion of that a year must be biodiesel, starting this year.  

Pilot Travel Centers, which operates highway truck stops, is REGI’s largest customer, accounting for 29% of revenue in 2010.  

Last year, advanced biofuel companies: Codexis (Nasdaq: CDXS), Kior  (Nasdaq: KIOR), Gevo (GEVO),  Amyris Biotechnologies  (AMRS) and Solazyme (Nasdaq: SZYM) had strong public debuts, but many have seen their shares fall dramatically since.  Kior is
down 30%, Gevo is down 59% and Amyris is down 33%, none of which are profitable.

Still, about eight more companies in the sector have IPOs planned for 2012, including Myriant, Ceres, Mascoma, Elevance Renewable Sciences, and Fulcrum Bioenergy, hoping the appetite for these stocks will increase.  

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