2/3/12

Enerkem, which converts municipal waste into renewable biofuels and chemicals, filed for a $125 million US IPO on Friday. The Montreal-based company, founded in 2000, is in the development stage and had not generated any revenues from product sales as of September 30, 2011. Its commercial demonstration facility, however, began producing methanol in June 2011 and will be upgraded in 2012 to produce ethanol, with a production capacity of 1.3 million gallons per year (MMGPY). A 10 MMGPY facility is currently under construction in Edmonton. The United States' RFS2 standard requires 16 billion gallons of biofuels to be mixed into the nation's fuel supply by 2022.

Renewable Energy Group (REGI) is trading down 7.5% since its IPO on January 18th. This partly reflects its reliance on continued regulatory support, but REG also depended on favorable feedstock prices. In contrast, Enerkem expects to be paid to use municipal waste as its "feedstock". Ceres (CERE), which produces feedstocks for biofuel production, plans to price next week. Enerkem is backed by venture capital firms Rho Ventures and Braemar Energy Ventures. Goldman Sachs, Credit Suisse and BMO Capital Markets are the lead underwriters on the deal.