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11 – 17 September 2006

Issue
– 098

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Last week saw a new upsurge of IPO activity in the
biofuels sector, after a few months categorised by slackening stock market
prices for the main US quoted biofuel producers. The new companies all hope
to raise money and develop projects outside the crowded US markets, and most either have
capacity up and running or are seeking to raise a more moderate amount of capital
than the big US IPOs seen over the past six months. This may indicate
increasing particularity in the international biofuel investment market, as
enthusiasm for standard corn-based ethanol production wanes a little.

Australia-based Sterling Biofuels, which plans to
develop a 130m-litre biodiesel plant in Sabah,
Malaysia, saw
its AUD 35.0m (USD 26.9m) ASX IPO over-subscribed last week. Trading will
begin on 28 September 2006, and the plant will start up in July 2007, if all
goes according to plan. The company has already secured a three-year sale
agreement with an unnamed energy trader for the biodiesel output, and has
secured preliminary permissions for the plant.

The Sabah
plant’s location is likely to be critical to the IPO’s success.
Sabah is a major palm oil producing state in Malaysia, and the site is a
purpose-built industrial park with a deep water port. Despite rising concern
about the environmental impact of Malaysian palm oil production, which may
negate any benefits from reduced CO2 emissions through deforestation and
unsustainable agriculture, foreign markets have not rejected one of the
cheapest sources of feedstock in the world. The Malaysian government has
expressed serious concerns about the availability of palm oil for biodiesel
production, and last week issued a warning to holders of development licenses
to build plants within the deadlines stated in their applications. This is
intended to deter companies from securing licenses in order to re-sell for a
commission, increasing uncertainty about future feedstock supply.

Brazilian biodiesel producer and project developer,
Brasil Ecodiesel, plans to launch an IPO on the BOVESPA stock exchange in Sao
Paolo. The company has submitted a proposal to the Commission for Financial
Values of the exchange, and intends to use the proceeds to build five new
biodiesel plants in various states in Brazil. US financial services provider,
Citibank, is acting as lead manager to the IPO.

Austrian biodiesel project developer, BDI BioDiesel
International, plans to float 1.4m shares on the Prime Standard of the
Frankfurt Stock Exchange on 25 September 2006, priced at between EUR 53.00
(USD 67.35) and EUR 62.00 (USD 78.78) per share. This will give a total
volume of between EUR 76.3m (USD 96.8m) and EUR 89.1m (USD 113m). The
offering will consist of 0.8m shares of new stock, 0.5m shares from existing
shareholders, and 0.2m shares as a greenshoe.

BDI BioDiesel has at least two plants fully
commissioned in Austria,
for a total of 143m litres per year, and uses its own multi-feedstock
technology to use a range of raw materials including fresh and used vegetable
oil and waste animal fat. It is also building a 238m-litre plant in Krems, Austria,
which will be owned by Austrian biodiesel producer, Strategic Biodiesel United
(SBU) and was developed in partnership with Austrian investment company, IMIS
oeko invest.

German sugar and bioethanol producer, Suedzucker,
also plans a Frankfurt IPO for its ethanol division, CropEnergies. Suedzucker
intends the float to raise EUR 200m (USD 257m), which would be used to expand
CropEnergies’ international presence. The division already owns and
operates a 260m-litre bioethanol plant in Zeitz in Eastern
Germany. Suedzucker has not yet issued a date for the IPO.

With so many companies about to offer their shares
to international investors, many with more inventive business models, it is
not surprising that US corn-based bioethanol producer, Hawkeye Renewables,
delayed its USD 325m NYSE IPO on 18 September 2006. Hawkeye already has several
operational plants, and although the postponement of a capital increase will
slow its growth, it is likely to continue to expand using operational
revenue.

After the boom which saw Aventine Renewable Energy,
VeraSun and Green Plains Renewable Energy raise very large amounts of capital
on the US
markets, a correction is in order. The immediate result may be that further
biofuel companies with US IPOs in the pipeline, including ethanol producers
ASAlliances Biofuels and US BioEnergy, and agribusiness The Andersons, may
struggle to achieve the valuations for which they hope. Outside the US
market, the new arrivals will have to show that they are offering something
special to attract the interest common in the more favourable climate three
months ago.

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10 – 12 October 2006

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11 – 13 October 2006

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16 – 19 October 2006

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NEX
update

Click here to check today’s changes in the NEX.

Selected news from the NEF newsdesk
– for more, enquire here.

Public Markets News

UPDATE: BDI Biodiesel planning to IPO on 25 September 2006

15 Sep 2006

Brasil Ecodiesel plans to IPO

14 Sep 2006

BDI BioDiesel International plans to IPO

13 Sep 2006

Sterling Biofuels’ IPO over-subscribed

13 Sep 2006

Suedzucker to float its bioethanol division

12 Sep 2006

VC/ PE
News

Colusa Biomass Energy secures equity financing

13 Sep 2006

SolarCity raises USD 10.0m

13 Sep 2006

M&A
News

Schmack Biogas to buy an indirect controlling shareholding in a
biogas equipment provider

12 Sep 2006

Dong Energy acquires Swedish wind project developer

12 Sep 2006

Company
Results

Akeena Solar reports revenue up but loss unchanged for Q2 FY06

15 Sep 2006

3S reports small H1 FY06 profit

14 Sep 2006

ECD Ovonics trims losses in Q4 FY06

13 Sep 2006

WorldWater forecasts Q3 revenue over USD 5.0m

11 Sep 2006

Debt & loans

NewGen to recieve USD 18.0m debt from Greystone Business Credit

13 Sep 2006

Grant
News

USDA announces USD 22.6m in VAPG and SMPG grant programmes

14 Sep 2006

Joint
Ventures

Varta forms JV with Saft

11 Sep 2006

Projects /
Asset Finance

FAA clears three more wind projects

15 Sep 2006

Panda Ethanol breaks ground on the Hereford facility

15 Sep 2006

JG Summit planning ethanol plant

14 Sep 2006

GE EFS backs 21MW wind farm in Hawaii

13 Sep 2006

KCP&L commissions Spearville wind facility

13 Sep 2006

Fund News

Climate Change Capital raises USD 830m to create largest private
sector carbon fund

11 Sep 2006

Contracts
News

SolarWorld and Scheuten Solar conclude supply agreement

15 Sep 2006

Gamesa Wind Tianjin secures USD 304m contract

14 Sep 2006

AMSC secures USD 4.6m in D-VAR orders

13 Sep 2006

People & Appointments

Kauffman to lead Good Energies

14 Sep 2006

Manufacturing and Scale-Up

ECD Ovonics to expand manufacturing capacity by 60.0MW

11 Sep 2006

Wacker and Dow Corning to build siloxane factory in China

12 Sep 2006

Products
& Technology

Ocean Prospect and E.ON UK join forces in Wave Hub project

13 Sep 2006

EnBW and Siemens plan fuel cell hybrid power plant

13 Sep 2006

BMW launches hydrogen-drive luxury car

13 Sep 2006

Other
News

Brazilian ANP conducts public hearing to discuss ethanol contracts

15 Sep 2006

Malaysia warns licence holders of biodiesel projects to build them
in time

12 Sep 2006

Australia pushes for national code for wind energy projects

11 Sep 2006

NEX weekly market report 08 – 15 September
2006

The NEX eased slightly last week, failing
to benefit from the rise in investor confidence brought about by the fall in
oil prices and data suggesting that inflationary pressures were easing. The
NASDAQ and the S&P 500 both moved ahead, by 3.2% and 1.6% respectively,
but the NEX ended the week 0.5% lower at 254.01, perhaps held back by the
3.9% fall in the AMEX Oil. Energy Conversion Devices, the US technology
company, was unaffected by the malaise, leaping 16.7% on the news that it was
to expand its thin-film solar module manufacturing capacity and that it had
trimmed losses to USD 0.02 per share, from USD 0.27 per share for the fourth
quarter.

Index
Performance

15/09/06

Since
01/01/06

Since
08/09/06

NEX

254.01

+17.0%

-0.5%

NASDAQ

2235.59

+1.4%

3.2%

AMEX Oil

1047.46

+6.1%

-3.9%

S&P 500

1319.66

+5.7%

1.6%

Top gainers in terms of change % since 25/08/06

Energy Conversion Devices

+16.7%

RailPower Technologies

+14.4%

Power-One

+11.2%

American Superconductor

+9.6%

Itron

+9.2%

Top losers in terms of change % since 25/08/06

Quantum Fuel Systems Technologies

-9.4%

Toho Tenax Co

-10.8%

Distributed Energy Systems

-12.5%

Active Power

-17.1%

Capstone Turbine

-18.3%

Demand-Side Saving companies were among
the top performers this week, making the sector one of only two in the index
to end in positive territory, with an increase of 5.5%. Solar, by contrast,
managed just a 0.5% rise. TSX-listed hybrid locomotive manufacturer, Railpower
Technologies, continued its recent rollercoaster ride on the upside this time,
with a 14.4% rise. NASDAQ-traded power management company, Power-One, was
lifted by a positive reception to its link with Micrel on low-current
applications, and ended the week up 11.2%, while Itron, the US energy
management software provider, rose 9.2% on NASDAQ as the market applauded a
contract with UGI Utilities.

In Generation Efficiency, US superconductor manufacturer, American
Superconductor, announced USD 4.6m of new orders for D-VAR systems to
regulate voltage at wind farms in Australia,
Canada, New Zealand and the United Kingdom, lifting its
shares 9.6% on the NASDAQ. This was offset by the 18.3% fall for Capstone
Turbine, the NASDAQ-listed US
microturbine manufacturer, which was the index’s worst performer,
dropping 18.3%.

Distributed Energy Systems, the US
fuel cell and distributed power system holding company, fell by 12.5% despite
its subsidiary Northern Power being awarded a USD 1.8m follow-on contract by
the Baku-Tblisi-Ceyhan Pipeline Company.

Active Power, the NASDAQ-listed US
flywheel manufacturer, recorded a drop of 17.1%, while Toho Tenax, a carbon
fibre manufacturer within Teijin Group, was 10.8% lower in Tokyo.
NASDAQ-listed US gas and hydrogen storage equipment manufacturer, Quantum
Fuel Systems Technologies, saw its stock drop 9.4% after it posted a net loss
of USD 13.4m, or USD 0.23 per share, in Q1 FY07, compared with USD 8.1m, or
USD 0.15 per share, in Q1 FY06.

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