Algae-oil maker Solazyme files to go public
The California company seeks to raise up to $100 million on the stock market to speed up commercialization of its algae oil for fuels, food, and personal care products.
A correction was made on March 14 with a corrected figure for Solazyme's revenue last year.
Algae-oil maker Solazyme picked a time of rising oil prices of more than $100 a barrel to signal it plans to go public on the stock market.
The San Francisco-based company on Friday filed its S-1 document to the Securities and Exchange Commission, outlining its plan to raise up to $100 million through an initial public offering. Solazyme grows algae with sugars in closed fermentation tanks to create oils, which can be used for liquid fuel and for chemicals, foods, or personal care products.
With the money, Solazyme intends to invest in further research and development and speed up its product commercialization by establishing feedstock supply arrangements and building manufacturing in multiple locations.
In its filing, Solazyme showed that its revenue has grown on sale of its oils for nutrition and skin care products but it is still not profitable, having lost $16.3 million on revenue of $38 million last year.
The company's strategy has been to make oils for specific personal care and nutritional markets before taking on liquid fuels where there is more price pressure and difficulty bringing a product to market. It has customers for food and personal care and was awarded a Department of Energy grant to make fuel for use by the Navy, which successfully tested a 50-50 blend of petroleum and algae oil It also has development arrangements with airlines Qantas, Chevron Technology Ventures, and with chemical company Dow.
With its contract manufacturing arrangements in skin care and nutrition, Solazyme said that it can supply oils with "attractive margins." At large scale, it expects that it can be competitive in chemicals and fuels as well in a purpose-built manufacturing plant, forecasting a cost below $3.44 a gallon.
There are several companies pursuing algae as a way to create oil, but Solazyme's technical approach is different than most. Rather than farm algae in glass tubes called bioreactors or in open ponds, Solazyme's algae are grown in closed tanks. The strains are optimized to produce oil and can be fed sugars from sugar cane or dextrose from corn. The company is researching ways in the future for nonfood cellulosic food sources, such as agricultural residue.
The company said its process allows it to scale up--another difficult challenge for algae farmers--because it can use standard industrial fermentation equipment.