CHICAGO, IL., October 6, 2020 – Water Tower Research has published a Management Series with Gevo Inc. (NASDAQ: GEVO). The report focuses on the company’s effort to secure project finance funding for its plant expansion strategy.
“Gevo has secured a series of off-take agreements that now totals 49 MGPY. This is a critical milestone that puts GEVO in the position to need plants, and those plants will require capital to construct. Project finance is the primary means of financing large production facilities, which is the focus of this Management Series,” said Shawn Severson, Head of ClimateTech and Sustainable investing at Water Tower Research. “GEVO is actively engaging potential investors through their banking partner in a process that started in April 2020. The key takeaway of this is that If GEVO can secure financing, it should be able to move ahead with plant construction. Then the delivery of product and hence revenue, keeping in mind the construction and delivery will take up to two years. Nonetheless, this would be the validation of GEVO’s hydrocarbons as a commercial product and create revenue. We also review the potential for GEVO to invest capital at the plant level to enable shareholders to participate in the IRRs generated by investing at the plant level.”
Mr. Severson continued, “This is the first plant of this scale and scope that GEVO is looking to build and the capital needed is substantial, at $700mm for all three plants. Project finance investors prefer known technologies and although GEVO has proven it can produce at larger scales, it is still new to the project finance community. This means the company and its investment bank are having to educate potential investors. This can draw out the process relative to what a normal timeline would be. ”
The full report can be downloaded HERE.
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