Solazyme Inc. (Nasdaq:SYZM), the South San Francisco-based developer of oils and alternative fuels from genetically modified algae, sold more than 11 million shares, raising $198 million in its long-awaited IPO late last week. According to a regulatory filing, Company shares surged 15% in their first day of trading on increasing demand for renewable fuel sources and industrial chemicals.
Some analysts view the strong debut as an indicator of a bright future for companies like Solazyme (including its rivals Gevo and Amyris), who use proprietary technology to convert organic material into biofuels, food supplements and specialty chemicals like those used in skin-care products and perfumes.
Solazyme, which has worked with the US military to develop cleaner fuels for aircraft, grows algae in fermentation tanks without the use of sunlight, allowing them to produce specific carbon compounds, whereas its competitors rely on the more traditional photosynthesis methods in ponds and translucent containers.
The algae-to-fuel outfit announced last week that it purchased its first plant, a biorefinery in Illinois that will produce 528,000 gallons of oil annually. It also has partnerships with Dow Chemical, Chevron, Unilever, Brazilian sugar-cane processor Bunge Ltd. and Ecopetrol, Columbia's largest oil company.
The World Economic Forum, an annual gathering of political, business, religious and other leaders, predicts that the global market for biofuels, primarily ethanol and biodiesel, will reach $230 billion by 2020. The U.S., with its brisk national defense and airline industries, is the world's largest market for fuel alternatives.
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