Cleantech IPOs Back On Stage Next Week With The Renewable Energy Group Offering

I, for one, am interested to see how Renewable Energy Group’s IPO turns out next week.

The deal is the first cleantech offering of 2012 and company plans to raise about $100 million by selling 7.2 million of its shares, according to its S-1. What’s striking about the offering is that Renewable Energy Group is another in the string of biofuels companies with deals either completed – Kior, Gevo, Solazyne, for instance – or in registration – including Luca Technologies, Fulcrum BioEnergy and Mascoma.

Yet unlike its peers, it has a substantial business. It also has some substantial challenges, including industry over capacity, high production costs and a dependency on government rules requiring biodiesel consumption.

Here are a few tidbits from the company’s S-1 filing:

Renewable Energy Group bills itself as the largest biodiesel producer in the United States responsible for 22% of the market. Its sales in 2011 grew to 148 million gallons, represent a 116% increase over 2010. Revenue through the first nine months of last year rose 279% to $557 million.

The company, which has grown through acquisitions including eight in the past two years, operates six plants. It uses animal fat, used cooking oil and inedible corn oil to develop biodiesel and claims a cost advantage to production techniques using vegetable oils and soybean.

Still, quarterly losses continue. The company says it has been cash flow positive through the first three quarters of 2011. But it posted net losses from operations in the second and third quarters of the year.

As of September 2011, long-term debt was $98.8 million.

Renewable Energy Group’s major shareholders include the West Central Cooperative, holding 22.2% of the company prior to the offering; USRG Holdco, a 15.5% owner; NGP Energy Technology Partners, holding 13.5%; Bunge, with 5.7%; and ED&F Man Holdings, with 6.4%.

Last week, it announced it will sell shares for between $13 and $15 on Jan 19. The question is what sort of reception they will get.

My guess, because of the reliance on government mandates, is tepid.