Investing in Renewable Olefins with Global Bioenergies
In an earlier article, we highlighted Joule, a company that is producing hydrocarbon diesel fuel and ethanol directly from sunlight and waste CO2. Audi, the world’s second-biggest maker of luxury cars, and Joule have a partnership through which Audi has acquired exclusive rights to certain of Joule’s patents in the automotive field. While Joule is a private company, another publicly traded company that recently signed a collaboration with Audi to develop clean transportation fuel is Global Bioenergies.
About Global Bioenergies
Funded in 2008, French company Global Bioenergies had an IPO on the NYSE Alternext market in Paris in 2011 trading under the symbol (EPA:ALGBE). Since IPO the stock has returned 61% with a 33% jump in the last month on the heels of the Audi announcement. The collaboration will entail Global Bioenergies supplying Audi with isooctane derived from isobutene. At today’s stock price of 37.73 euros, the Company’s market cap is just over $93 million.
Global Bioenergies is one of a few companies worldwide, and the only one in Europe they claim, that is developing a process to convert renewable resources into hydrocarbons through fermentation. The Company’s primary focus is the production of isobutene from renewable resources such as sugar, starch, and forestry waste:
Isobutene represents a $25-30 billion market. It is the only olefin with direct applications not only for the production of plastics and elastomers but also in the field of fuels such as diesel, gasoline and jet fuel. The company recently replicated their success with producing isobutene to include propylene and butadiene and is also looking to continue with other members of the gaseous olefins family that are all identical to those currently produced massively from fossil oil. The total annual market for gaseous olefins represents around $300 billion.
Global Bioenergies has a prudent business model which consists of granting non-exclusive licenses to collaboration partners in exchange for fixed upfront payments and royalties. This business model shares the process value with industrialists but allows the avoidance of risks associated with factory construction and operation. Global Bioenergies can remain focused on innovation and does not need the heavy capital investments required to build production facilities.
Given Global Energies’ business model, an increasing number of collaboration partners signals industry adoption and consequently future milestone and royalty payments. The recent Audi announcement shows that one of the three best-selling luxury automakers in the world believes Global Energies’ technology is economically viable and helps reinforce investors’ confidence in the underlying technology platform. As more collaborations are announced, the technology will be further validated with recurring revenues to follow. This publicly traded company merits a serious look by investors who seek exposure to disruptive renewable energy companies, many of which are privately held at the moment.
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