Kior Inc. (KIOR), a developer of transportation fuels produced from wood chips and non-food biomass, was unchanged on its first day of trading after pricing its initial public offering 29 percent below the top end of the expected range.
Kior closed at $15.00 in Nasdaq Stock Market trading. The Pasadena, Texas-based company raised $150 million yesterday by selling 10 million Class A shares for $15 each. It had previously said it expected to price the offering at $19 to $21. The proceeds will partially fund construction of its second commercial plant in Newton, Mississippi.
The initial offering for a company that produces a renewable substitute for petroleum comes after the U.S. and 27 allies released oil stockpiles to boost economic growth and driving crude to a four-month low. Pricing Kior’s share at $15 gives it a valuation that’s comparable to other biofuel companies that are less directly linked to refiners, said Pavel Molchanov, an analyst at Raymond James & Associates Inc.
Yesterday’s “$4 a barrel plunge in oil prices created a challenging market backdrop for a biocrude company like Kior,” Molchanov said in an e-mail. At $15 a share, the company’s market capitalization of about $1.5 billion “puts Kior more on par with Amyris (AMRS) and Solazyme. (SZYM)”
Kior is the fifth company developing advanced biofuel technology to go public since the beginning of 2010, following offerings for Codexis Inc. (CDXS) in April 2010, Amyris Inc. in September 2010, Gevo Inc. (GEVO) in February 2011, and Solazyme Inc. last month. Codexis makes biocatalysts that can be used in biofuel production, while Amyris, Gevo, and Solazyme all use sugar fermentation processes to make fuel and specialty chemicals.
“Kior differs from its predecessors as it’s not the biotech-biofuel model, but it is more compatible with the oil refining industry,” Harry Boyle, lead bioenergy analyst at Bloomberg New Energy Finance, said by e-mail. “Amyris, Codexis, Gevo and Solazyme all offer capital-light paths to greater theoretical bioproduct sales.”
The company’s final product, which can be processed into gasoline or diesel using standard refining systems, “appears to fit more seamlessly into the current transport fuel refining business, as evidence is provided by its agreed offtake arrangements,” Boyle said.
Catchlight Energy LLC, a joint venture of Chevron Corp. (CVX) and Weyerhaeuser Co. (WY), has agreed to provide forestry waste feedstock for Kior’s first plant and buy the fuel it produces. Hunt Refining Co. also has a deal to purchase fuel blendstocks from Kior.
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