Branson-Backed Bio-fuels Company Goes Public; Product Would Power SpaceShipTwo

A Colorado company whose new bio-fuel would power Richard Branson’s SpaceShipTwo on suborbital flights has gone public. Gevo sold 7.15 million shares at $15 each, with the stock’s value shooting up 16 percent during the first day of trading on NASDAQ.

Gevo plans to begin producing isobutanol in the first half of 2012, which is one of two fuels on Virgin Galactic’s spacecraft. Branson’s Virgin Green Fund is one of the company’s investors.

Isobutanol is an alcohol compound that can be used for the production of jet and diesel fuels, as an alternative to ethonol in gasoline mixtures, and for producing cleaners, plastics, and rubber. According to Gevo’s Wikipedia page:

Isobutanol produced from renewable raw materials may be a competitively priced alternative source of C4 hydrocarbons for the petrochemical and refining industries. Over the last decade, fermentable sugars had lower cost volatility than petroleum, which is important to industrial C4 consumers who are seeking less volatile sources that might be used to hedge equivalent petroleum-derived materials….

Gevo has developed technology to retrofit existing ethanol production plants to produce isobutanol. Gevo’s Integrated Fermentation Technology®, or GIFTâ„¢,  is an integrated technology platform for the efficient production and separation of isobutanol….

In the fuel blendstock market, isobutanol can be used to replace high-value blendstocks such as alkylate and can be blended in conjunction with, or as a substitute for, ethanol and other widely used fuel oxygenates. In November 2010, Gevo became the first company to receive EPA (Environmental Protection Agency) certification for isobutanol as a fuel blendstock after meeting the EPA’s standards under the Clean Air Act.

Daily Finance calls Gevo’s business stategy smart and adds:

Even though Gevo was able to raise $107 million, that may not be enough. Keep in mind that since 2005, the company has sustained losses of $77 million.

Gevo won’t launch its product until the first half of 2012, which means there’s no need for investors to rush into this stock. As time goes by, there should be opportunities to get shares at a lower price.