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Renewable Energy Group I.P.O. ‘lacks luster’; $72 million raised

<p><img src="http://www.ecoseed.org/articleImages/Renewable-Energy-Group-IPO-lacks-luster-72-million-raised_60x60.jpg" align="left" />The first renewable energy initial public offering in the United States this year made little gains as the Renewable Energy Group Inc. raised $72 million in its trading debut yesterday. The company sold 7.2 million shares for $10 each on the Nasdaq Stock Market, trading under the symbol REGI, according to a statement.  
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<p class="written_by">By Oliver M. Bayani</p>
  <img src="http://www.ecoseed.org/articleImages/Renewable-Energy-Group-IPO-lacks-luster-72-million-raised_295x220.jpg" alt="Renewable Energy Group I.P.O. ‘lacks luster’; $72 million raised" title="Renewable Energy Group I.P.O. ‘lacks luster’; $72 million raised" align="right" />
 
<p align="justify">The Ames, Iowa-based company makes biodiesel from inedible animal fat, used cooking oil, inedible corn oil and other feedstocks.
The first renewable energy initial public offering in the United States this year made little gains as the Renewable Energy Group Inc. raised $72 million in its trading debut yesterday. </p>
 
<p align="justify">The company sold 7.2 million shares for $10 each on the Nasdaq Stock Market, trading under the symbol REGI, according to a statement.</p>
 

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<p align="justify">The company's shares rose 1 percent to $10.10 at 4 p.m., New York time, when trading closed January 19 with an all-day high of $10.29. </p>

<p align="justify">Renewable Energy Group earlier planned to price its I.P.O. between $13 and $15 a share. </p>

<p align="justify">The Ames, Iowa-based company makes biodiesel from inedible animal fat, used cooking oil, inedible corn oil and other feedstocks. The fuel produced can be used in existing diesel engines without modification.</p>

<p align="justify">Founded in 1996, Renewable Energy Group bills itself as the largest biodiesel producer in the country. It sold almost 68 million gallons of biodiesel in 2010, about 22 percent of total United States biodiesel production, according to a Securities and Exchange Commission filing. </p>

<p align="justify">Renewable Energy Group runs six biodiesel plants in Iowa, Minnesota, Texas and Illinois with a total capacity of 212 million gallons per year, and owns five of them. It also has three partially completed plants in Louisiana, Kansas and New Mexico.</p>

<p align="justify">The company has shown growing revenues, generating $216.46 million in 2010, $131.5 million in 2009 and $85.45 million in 2008. </p>

<p align="justify">The company posted losses of $21.59 million in 2010, $68.86 million in 2009 and $15.88 million in 2008. But for the first quarter of this year, the company posted a net income of $3.74 million, up 21 percent from $3.08 million in last year's first quarter.</p>

<p align="justify">Plans on how the proceeds will be used remain unchanged. According to its S-1 filing with the U.S. Securities and Exchange Commission last July, about $12 million will be spent to purchase a plant in Seneca, Illinois which it currently leases. </p>

<p align="justify">The remainder of the proceeds will be used on expansion plans into Europe, South America and Asia, and potential acquisitions and joint ventures. </p>

<strong>2011 I.P.O.'s</strong>

<p align="justify">Last year, a number of biofuel companies filed for I.P.O.'s, including Texas-based Kior, which raised $150 million in June; California's Solazyme, raising nearly $200 million in May; and Colorado firm Gevo, which raised almost $96 million in February. </p>

<p align="justify">However, most of these companies saw their shares take a dive later on. </p>

<p align="justify">Analysts at Renaissance Capital said the weak trading performance of some biofuel companies does not mean that 2012 is a bad time for public offerings.</p>

<p align="justify">"We do not believe the lackluster showing is necessarily indicative of current demand for I.P.O.'s. Alternative energy I.P.O.'s tend to appeal to a somewhat limited subset of investors, and there was likely skepticism about the deal because of poor trading from 2011 biofuels I.P.O.'s and the fear of negative impact from regulatory changes," the firm wrote. </p>

<p align="justify">Ten I.P.O.'s will be reportedly be priced in the next two weeks</p>

<p align="justify">The Connecticut-based market research firm said the FTSE Renaissance US IPO Index is also up 8.5 percent year-to-date, against 4.5 percent for the S&P 500, "indicating that recent I.P.O.'s are performing well overall and investor risk appetite for newly public companies is increasing."    <div class="img-left" align="left"><br />
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