Solazyme’s much-anticipated initial public offering (IPO) finally happened last Friday, selling about 11 million shares at $18 – raising $198 million in total, twice what it expected when it filed (see the March 29, 2011 LRMCJ – client registration required). Today the stock is trading up 20% at about $22, for a valuation of $1.3 billion.
While that dwarfs Gevo (trading at 30% above its IPO price, valuation at $475 million), it’s comparable to Amyris (trading at twice its IPO price, valuation at $1.3 billion). All of this bodes well for the next bio-based chemicals IPO, Myriant, which which announced its filing last week and is looking to raise $125 million. Myriant recently took in $60 million from PTT Chemicals and started constructing a plant in Louisiana, due to open in 2013 (see the January 13, 2011 LRMCJ and the January 27, 2011 LRMCJ – client registration required). Among the notable data in the filing is a memorandum with China National BlueStar Group for a “jointly-owned, 220-million-pound biosuccinic acid plant in Nanjing, China, and an agreement for the exclusive supply of biosuccinic acid to BlueStar.”
We’ve noted the importance of startups’ “social network” of partnerships (see the report “Green Materials’ Social Networks”), and clients might rightly compare the soaring valuations of bio-based fuels and chemicals with the increasingly frenzied valuations of actual social networking companies of LinkedIn (post-IPO valuation of $7.3 billion), Skype (bought by Microsoft for $8.5 billion), and Facebook (valued at $50 billion in its last round of fundraising). There is undeniable hype driving both fields today, and investors should take a cautious stance based on the companies’ partnerships, plants, and future plans. While bio-based chemical and fuel companies have long-term contracts and hard assets that social networking sites don’t, the real long-term driver of their success will be the difference between their feedstock and manufacturing costs and oil prices; the former are declining predictably with scale and the latter looks to rise for some time to come.