If successful, Global Ethanol Holdings will have an estimated market capitalisation of up to $A1 billion – more than three times the size of any ASX-listed biofuels company.
Other Australian biofuels hopefuls have started to participate in the US market, where biofuels production is becoming a high-profile industry, endorsed with the political will and regulatory incentives to speed up development and production.
GEH already has controlling interest in a 100 million gallons per annum (more than 378.5 megalitres per annum) capacity ethanol plant in Lakota, Iowa and a 57Mgpa capacity plant in Riga, Michigan, using corn as the primary feedstock.
The company estimates its current ethanol production at around 100Mgpa.
GEH plans to use the capital raised in the IPO to double or triple production at its existing sites and further develop its options for another three potential greenfield sites in the US.
The company has decided to list on the Australian Stock Exchange with the support of its seed capital investor, South African merchant bank Investec, which currently holds an 80% interest in GEH.
GEH is headed by well-respected businessman Trevor Bourne, who first became involved with the biofuels industry while working for Multiplex, which at the time owned Australian Biofuels.
Bourne has told the media that the Australian biofuels industry is under-developed, and cannot offer the same opportunities provided in the US, although he has not ruled out future domestic production if better regulatory and consumer conditions develop.
GEH has forecast total revenues of $US249.4 million ($A331.7 million) for the current financial year, with an expected $US31.6 million net profit, based on favourable product demand and pricing and the price of oil continuing to rise.
If GEH is able to finance all of its expansion plans and develop the three new plants, the company will become one of the top three ethanol producers in the US, with a combined production capacity of more than 600Mgpa.
Investec is expected to reduce its shareholding to around 35% during the IPO, which will open the bookbuild on August 9 and close the following day.
Global Ethanol Holdings anticipates official listing on the ASX on August 21.
