Biofuels-related investment, M&A activity passes $10B for 2011

51 transactions, $10B changing hands in a hot year for biofuels-related investment; US leads, but Latin America, EU close behind.

Deal flow surges in Q2; free DealFlow database download.

In Florida, Biofuels Digest released its Biofuels DealFlow recap for 2011, tracking private sector investments totaling $3.8 billion in new biofuels capacity or in advancing early-stage companies, plus $6.78 in biofuels-related mergers & acquisition activity.

Overwhelmingly, the deal of the year (to date) has been the $6.3B acquisition of Danisco by Dupont, but the Digest also tracked 50 other transactions for the year to date.

Surge in Q2

The second quarter was the busiest for new investments, with 21 deals representing 2.59B in investment. The Digest tracked $756 million in investment during the first quarter (and $6.4B in M&A activity, led by the Dupont-Danisco merger), with another $474 million in investment for the third quarter to date (plus $388M in M&A activity).

US for technology; elsewhere for scale-up investment

The US remained the most active region for new investment, attracting 22 transactions totaling $1.104B for the year to date, but Latin America was close behind with $935M from seven transactions, and the EU trailed closely with $908 million from seven transactions. Asia-Pac received $448M in tracked new investment via four deals, while $386M was poured into Africa in five transactions and $12M into Canada in one deal.

The free database of 51 transactions for 2011 is downloadable via biofuelsdigest.com.

Overall transaction size was in the $130M range for Latin America and the EU, while average deal size was $50 million in the US, reflecting the larger number of investments made in early-stage technologies, as opposed to project investments.

The largest single investment was a $700 million transaction by Polimeri Europa, Novamont, who announced that they would invest $700M to build a bio-based product complex in Italy. Largest deal in the US was the $227 million Solazyme IPO.

Key venture capital raises

Key venture capital raises for the year to date include: $75 million by Enerkem, $50 million by Elevance, $36.5M by OPX Biotechnologies, $43M by Avantium, $20M by Cobalt, $5M (set) by Frontline Bioenergy, $25M (set) by Agilyx, $16M by Solix, $2M by Coolplanet, $75 million by Fulcrum Bioenergy, $50 million (set) by Mascoma, and $12 million by Woodland Biofuels.

The free database of 51 transactions for 2011 is downloadable via biofuelsdigest.com.

Lux Report says inflexible technologies will be weeded out

In related news, Lux Research released its “Hedging Bets with Flexibility in Alternative Fuels report, and said that “investment has dramatically climbed to an all-time high of $698 million for companies with flexible technologies that can use a variety of feedstocks or generate diverse end products. As this trend continues, start-ups stuck with less flexible technologies will be forced out of the industry.

Lux said that synthetic biology has attracted the most funding since 2004: $1.84 billion or 28.4% of the total. But investors shouldn’t ignore other flexible technologies. The catalytic approaches from Virent and Elevance, for example, can produce a range of fuels, rubbers, oils, and plastics. Technologies capable of using agricultural, solid, or gaseous waste, such as LanzaTech, GlycosBio, and Ignite Energy, present further opportunities. In their report, Lux Research analyzed 333 investments in 170 unique start-ups since 2004, breaking down investments by technology, fuel, geography, and investment stage. www.luxresearchinc.com