Biofuel developer KiOR raises $150 million in initial share sale

Renewable fuels company KiOR Inc raised $150 million in a U.S. initial public offering of 10 million shares of common stock.

The offering was priced at $15 each, well below the initial expectation of $19 to $21 a piece, according to a recent regulatory finding. KiOR said in a filing with the U.S. Securities and Exchange Commission that it plans to use the proceeds to fund the company's second commercial plant in Newton, Mississippi.
The Texas-based company gave the underwriters a 30-day option to buy up to an additional 1.5 million shares to cover any excess demand. While the re-price represents a lowering of KiOR's fundraising ambitions, the firm still raised more money than its original US$100 million target announced in April. KiOR processes wood and non-food agricultural biomass into a renewable crude oil that can be converted using standard refining equipment into substitutes for gasoline and diesel fuel.
The technology combines proprietary catalyst systems with "well-established fluid catalytic cracking, or FCC, processes that have been used in crude oil refineries to produce gasoline for over 60 years," KiOR said in its IPO prospectus.
Gavin Maxwell, executive chairman of bioenergy consultancy Coolfin Partnership in Ireland, said KiOR is a "great company" with strong fundamentals but he would have been "astonished" if it had priced at the top of its range.
Given the long lead time for commercialising biofuel technologies, he said it is essential that policy-makers and capital investors take a long-term approach to the development of the sector.
"The sector needs long-term thinking when it comes to investment and to returns, and there's the need to support good vanguard companies and supply chain technologies, many of which are pre-IPO," Maxwell said.