BEI was formed earlier this year when investment and advisory firm Babcock & Brown formalised its strategic relationship with ASX-listed Environmental Infrastructure Limited, in which it held a 60% stake.
When the restructuring was originally announced in April, B&B managing director Phil Green said BEI would focus on the roll-out of Australian biodiesel plants in an attempt to gain "first mover advantage" in the renewable energy sector.
Since then, BEI has acquired a 50% stake in Natural Fuels Australia and complete ownership of Australian biofuels producer Southern Oil Refining.
At the company's annual general meeting earlier this month, Green said the company would seek investment opportunities overseas, such as biodiesel in Europe and ethanol in the United States.
BEI announced its intention to purchase US company Denco on Monday, saying it had raised the necessary funds for the acquisition.
Denco has interests in several US ethanol businesses, including 100% ownership of a 25-million-gallon per annum plant, in Morris, Minnesota, which produces denatured ethanol from corn.
Denco also holds assets include ethanol consulting and marketing groups, as well as a distillers’ grain technology and production company. In addition, Denco has minority interests in three other ethanol production facilities.
In August, the US government passed legislation mandating an increase in ethanol production to more than 25 billion litres per annum by 2012.
BEI managing director Gary Levin said the acquisition provided an entry point to the US market through a profitable business with good cashflow.
"The US ethanol market has performed well and continues to have a favourable outlook based on regulatory requirements, incentives for clean renewable energy sources and the demand for alternative fuel sources to oil," Levin said.
"Significant increases and volatility in the oil price, and events such as the recently signed Energy Bill have driven the strength in the ethanol price."
Yesterday, BEI provided the following details about raising the capital for the Denco acquisition.
• The capital raising involved a fully underwritten institutional placement of about $45.7 million and a 1 for 5 non-renounceable rights issue at $1.75, to raise about $29.6 million. The group will also take on senior project debt of US$33 million.
• The balance of the equity raised, about $19 million, will be available to Denco for acquisition, expansion and replication opportunities.
