Municipal waste converter Enerkem sets terms for $131 million US IPO

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Enerkem, which converts municipal waste into renewable biofuels and chemicals, announced terms for its IPO on Monday. The Montreal, Canada-based company plans to raise $131 million by offering 7.3 million shares at a price range of $17.00 to $19.00. At the midpoint of the proposed range, Enerkem would command a market value of $536 million. Enerkem, which was founded in 2000 and booked $3 million in sales in 2011, plans to list on the NASDAQ under the symbol NRKM. Goldman Sachs, Credit Suisse and BMO Capital Markets are the joint bookrunners on the deal. In the filing, Robert W. Baird, Canaccord Genuity and CIBC World Markets were announced as co-managers. Enerkem is backed by venture capital firms Rho Ventures and Braemar Energy Ventures.

Enerkem is in the development stage and had not generated any revenues from product sales as of December 31, 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 up 4% since its IPO on January 18th. Its poor initial trading partly reflected its reliance on continued regulatory support, but REG also depends 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, cut its deal size but is up 20% since a February 21st IPO.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , IPOs
Referenced Symbols: CERE , REGI

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