Tags: ceres | ipo | biofuels | crop

Biofuels Crop Company Ceres Rises on First Trading Day

Wednesday, 22 Feb 2012 04:51 PM

 

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Ceres Inc., a developer of energy crops used in the production of biofuels, rose 14 percent in its first day of trading Wednesday.

The shares, which began trading on Nasdaq under the symbol CERE, rose to $14.80 at the close in New York. Ceres, based in Thousand Oaks, California, sold 5 million shares for $13 each, the second price cut and a 43 percent drop from the company’s initial proposed price of as much as $23.

Ceres, which has been operating since 1997, genetically modifies crops for improved yields and desired traits such as drought and salt tolerance. Proceeds from the $65 million IPO will fund new facilities and new hires, as well as production and regulatory approval of new seeds, the company said in a Feb. 8 filing.

Ceres is increasing production to challenge Monsanto Co. and DuPont Co., the two largest makers of genetically modified crops. Its other competitors include Dow Chemical Co., Syngenta AG, and Advanta India Ltd.

The company last year began selling sweet sorghum seeds, an alternative to sugarcane in the production of ethanol, in Brazil, its largest potential market.

Ceres also sells switchgrass and high biomass sorghum seeds in the U.S. and has conducted biofuel production trials using its energy crops with Amyris Inc., Gruppo Mossi & Ghisolfi, Novozymes A/S, and UOP LLC, a unit of Honeywell International Inc., according to the filing.

Improved Crops, Research Grants

Monsanto, which worked with Ceres from 2002 until 2010 to develop improved corn and soybeans, has a license for some of its genetic work. Nearly all of Ceres’ revenue through 2007 was from license payments as part of that research program, the company said in its filing.

Ceres’s net loss widened in the year ended Aug. 31 to $36.4 million, from $22.6 million for a year earlier, according to the filing. Most of the company’s $6.6 million revenue was from collaborative research and government grants.

Monsanto, based in St. Louis, has a 4.8 percent stake in Ceres after its 6.1 percent stake was diluted following the offering. The company’s other investors include Artal Luxembourg SA with a 15.2 percent stake; Warburg Pincus Private Equity with 12.2 percent; Ambergate Trust with 11.6 percent; and Oxford Bioscience with 7.9 percent.

Underwriters Goldman Sachs Group Inc., Barclays Plc, Piper Jaffray Cos, Raymond James Financial Inc. and Simmons & Co. International have an option to buy an additional 750,000 shares.

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