Avantium IPO “Many Times Oversubscribed:” What Buyers Are So Excited About

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Jim Lane 

In France, Avantium completed its highly-anticipated initial public offering, raising $109.5M (€103M) via the sale of 9,401,793 shares at $11.70 (€11) per share, giving the company a market capitalization reaches of $294M (€277M). Trading will begin on March 15th 2017 on Euronext Amsterdam and Euronext Bruxelles under the symbol AVTX.

The Company anticipates to use €65-75 million of the net proceeds of the Offering for the funding of the Joint Venture, enabling it to construct and operate the reference plant for the commercialization of the YXY technology. The company’s first world-scale plant is a 50,000 tons per year FDCA production unit planned for Antwerp as part of a joint venture with BASF. The rest of the funds will be used to build pilot plants for the company’s Zambezi and Mekong renewable chemicals projects, as well general corporate purposes.

According to the company’s primary shareholder, Sofinnova Capital VI, the offering was “many times oversubscribed“ and the company indeed raised more capital in the IPO than its initial target of $106M (€100M), as set when the company launched its roadshow last month.

“Avantium has completed one of the most successful IPOs in this emerging and promising renewable chemistry sector,” said Denis Lucquin, Managing Partner at Sofinnova Partners and Avantium Board member since 2011. “This success comes just a few weeks after Sofinnova Partners announced the first closing of its Sofinnova IB I Fund entirely dedicated to renewable chemistry, and fully validates our vision and strategy. As lead investor, and still main shareholder after the IPO, we are extremely pleased with this listing. It confirms investors’ confidence in the team’s talent and ability to transform a visionary project into a performing global company.”

You can see the Sofinnova Fund announce, as filmed live on the ABLC main stage, here via BioChannel.TV.

The Avantium Backstory

Avantium’s YXY technology converts plant-based sugar into chemicals and plastics, including 2,5-furandicarboxylic acid, a precursor to the promising bioplastic polyethylene furanoate.

As the company observed, “In 2011, Avantium was the first company to build an FDCA pilot plant with a production capacity of 15 tons FDCA per annum. This pilot plant enabled Avantium to test PEF through its partners and to continue its process development efforts to improve the economics of the process and strengthen its engineering package in preparation for the scale up to commercial and industrial scale.”

The tempting target that investors could not ignore: Plastics

With 311 million tons produced in 2014, plastics are essential materials in people’s everyday lives. This number is expected to double in the next 20 years and increase to approximately 1 billion tons by 2050. Avantium’s market opportunity is driven by the increasing demand for renewable chemicals and materials, and increasing consciousness around the sustainability of products and production methods.

PEF has improved barrier properties for gasses like carbon dioxide and oxygen, leading to longer shelf life of packaged products. It also offers a higher mechanical strength, thus thinner PEF packaging can be produced and fewer resources are required. The end markets for packaging materials made of PEF represent an aggregate annual turnover of over US$200 billion.

“PEF is strongly positioned to become the next generation packaging material,” said Avantium in the lead-up to the IPO. It is a 100% biobased, 100% recyclable plastic with superior performance properties, making PEF an attractive alternative to PET and other packaging materials such as aluminum, glass and cartons.”

The First Commercial Plant

In the end, the IPO was about raising capital for the first commercial plant. The Joint Venture intends to build and operate the first commercial reference plant for the production of FDCA, the key building block for producing polyesters, such as polyethylene- furanoate (PEF), a 100% biobased and fully recyclable plastic.

The key factor: Partnerships for Progress

What did investors buy into? As we have seen in the past, world-class partners who have bought into the technology and have signaled that, in their view, the technology is sustainable, affordable, reliable and scalable.

In this case, BASF, Coca-Cola, Danone, Toyobo, ALPLA and Mitsui.

In particular, the “whole value chain” set of partners from technology through to customer demand. In the case of companies that arrived on the market in the previous IPO wave of 2010-2012, the partners tended to be more focused on the feedstock and technology side, and there were offtake partners but not so many actual hard money investors visible for companies like Gevo, Solazyme and Amyris that were focused on the higher-value molecules that the companies eventually delivered to market.

What’s Next: Zambezi

Last month, we reported that Avantium,AkzoNobel, Chemport Europe, RWE and Staatsbosbeheer partnered to build a reference plant at the Chemie Park Delfzijl. This important step marks the next stage of a collaborative effort to determine the feasibility of a wood to chemicals biorefinery in Delfzijl. The Zambezi process converts woody biomass into sugars and lignin. It is particularly suited for making high purity glucose required for the production of sustainable materials such as PLA, PEF, PBAT, or PHA).

The Bears have been confounded

On the floor at ABLC last week, there was considerable skepticism that the IPO would succeed.

“I just don’t see it,: went a refrain heard from several high-level industry players. “Raising capital via an IPO for a first commercial plant, it has proven so difficult to maintain the share price for the companies that came out before. It feels early.”

The Multi-Slide Guide to Avantium

We have our multi-slide guide to the company, its technology, partners, progress and future milestones, here.

Just One Word. Plastics: The Digest’s 2017 Multi-Slide Guide to Avantium

Jim Lane is editor and publisher  of Biofuels Digest where this article was originally published. Biofuels Digest is the most widely read  Biofuels daily read by 14,000+ organizations. Subscribe here.


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