Renewable Energy Group plots $87m IPO

The largest biodiesel producer in the US has revealed that it expects to price its initial public offering (IPO) at between $13 and $15 as it seeks to raise funds to support international expansion and efforts to diversify into renewable chemicals.

Renewable Energy Group said in a filing this week that it plans to sell more than 6.8 million shares of its common stock at the stated price range.

After first registering for the IPO in July last year, the company has revealed it hopes to rake in net proceeds of about $86.5m. It added that it plans to use around $12m of the new funds to buy a production facility, which it is currently leasing in Seneca, Illinois, that is owned by three of its stockholders – Bunge, USRG and West Central.

In the longer term, the company said it is aiming to grow its core biodiesel business, diversify into renewable chemicals, accelerate the development of advanced biofuels and expand internationally.

The 15-year-old company sold between 146 and 148 million gallons of biodiesel in 2011, approximately 116 per cent more than in 2010, reflecting a greater demand for biodiesels in the US as a result of regulations requiring diesel fuel to be blended with biofuels.

The company said most of its biodiesel is made from lower cost feedstocks, including inedible animal fat, used cooking oil and inedible corn oil, rather than higher cost virgin vegetable oils such as soybean oil.

The biofuel industry has been criticised by some environmental groups for increasing demand for crops such as corn and soy, leading to rising food prices and growing pressure on agricultural land.

The company is planning to list on the Nasdaq Global Market, under the symbol REGI.