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Enerkem IPO comes up short Add to ...

Montreal-based biofuel company, Enerkem Inc. was a Johnny-come-lately and so came up short on its planned $125-million (U.S.) initial public offering, which the company has withdrawn citing “unfavourable market conditions.”

The company filed its registration form with the Securities & Exchange Commission in the U.S. in February, and had lined up Goldman, Sachs & Co., Credit Suisse Securities and BMO Capital Markets as joint book runners.

But the public market has recently become skeptical about much of the clean tech sector, including biofuel producers.

Enerkem, which was ranked seventh among the 50 hottest companies by Biofuels Digest, decided that it will be better served by continuing as a private company, with the backing of partners like Waste Management Corp. and Valero Energy.

“At this point in time, we believe there are better options for us to finance our growth plan as a private company,” company vice-president Marie-Hélène Labrie said.

The Montreal company is in the process of building three commercial scale biofuel plants that use solid municipal waste as feedstock: one in Edmonton, one in Mississippi, and one in Varennes, Que. All are receiving some form of government assistance.

Don Roberts, managing director for CIBC World Markets, said investors had been keen on biofuel companies and energy storage firms, but their ardour has cooled in recent months.

“Biofuel was one of the sweet spots for capital markets over the last year and a half, but it’s had a pretty poor post-IPO performance,” Mr. Roberts said.

Enerkem was beaten to the market by several U.S. biofuel companies, and investors took a bath on them.

Amyris Inc., of Emeryville, Ca, launched its public share offering in September, 2010, at $16 per share and is now trading at $2.86 on the NASDAQ. San Francisco-based Solazyme launched last June at $18 and watched its shares drop to $10.75.

Globally, initial and secondary public financings for clean tech companies dropped by 83 per cent in the first quarter of 2012, compared to the same period of 2011, Mr. Roberts said.

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