Renewable Energy, 1st US IPO Of 2012, Prices Below Range
19 Januar 2012 - 2:56AM
Dow Jones News
The first U.S. initial public offering of the new year priced
below its expected range Wednesday night, with biofuel company
Renewable Energy Group Inc. selling 7.2 million shares of its
common stock at $10 a share.
The Ames, Iowa-based company had aimed to sell its shares at $13
to $15 apiece. The stock begins trading Thursday on the Nasdaq
under the symbol "REGI."
Renewable Energy is the first IPO to come out in the U.S. in
2012, but its difficulty pricing doesn't mean other deals lined up
to debut in the weeks ahead will run into the same resistance.
Other biofuel and renewable fuel companies that came public in the
past year -- Gevo Inc. (GEVO), KiOR Inc. (KIOR) and Solazyme Inc.
(SZYM) -- are trading well below their IPO prices, which likely
weighed on Renewable's valuation. Stocks scheduled to trade last
week include two tech deals, an industry which has fared better
with IPO investors than biofuels.
Although it didn't command the price it wanted, Renewable Energy
still could go on to trade well on its first day, if investors feel
that the risks associated with its industry have been adequately
discounted in the IPO price.
Renewable Energy claims to be the largest producer of biodiesel
in the U.S., based on gallons made. It uses low cost feedstocks to
create the fuel, such as inedible animal fat, used cooking oil, and
inedible corn oil. In the first nine months of 2011, total revenue
nearly quadrupled to $557 million compared to the same period a
year earlier, but its loss widened to $27 million from $25 million
in the 2010 period.
One caution for biofuel investors is the excess production
capacity among biodiesel plants in the U.S. currently, with many
plants not operating or running at reduced capacity. The annual
production capacity of plants that have already been built and
plants under construction is higher than both historic U.S.
consumption of biodiesel and the future requirements for
consumption under a federal regulation.
Renewable Energy's offering was managed by UBS AG (UBS) and
Piper Jaffray Cos. (PJC).
-By Lynn Cowan; 301-270-0323; lynn.cowan@dowjones.com
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