Renewable Energy Group (REGI), the leading domestic producer of biodiesel, priced at $10.00 on Wednesday, below the proposed range of $13.00 to $15.00. In its first day of trading, the stock finished at $10.10, up 1%. Renewable Energy Group was the first IPO of the year to price, but the lackluster showing is not necessarily indicative of current demand for IPOs.
The IPO from Renewable Energy has been hit partially by a cloud over alternative energy in the wake of the controversy over Solyndra, a solar-panel manufacturer that went bankrupt last year after receiving a taxpayer-backed loan of $535 million.
It also faces unstable U.S. energy policies. For example, a $1 per gallon tax credit for fuel firms to blend biofuels into gasoline and other refined products expired on Dec. 31. Congress has yet to make any significant move to revive the program.
On a positive note, an expanded renewable fuels standards went into effect in July 2010, which requires a portion of diesel fuel consumed in the U.S. to come from renewable sources.
Renewable Energy Group operates six biodiesel plants, with more than 210 million gallons of capacity.
In the broader market, the FTSE Renaissance US IPO Index is up 8.5% YTD, against 4.5% YTD for the S&P 500, indicating that recent IPOs are performing well overall and investor risk appetite for newly public companies is increasing.
With 10 deals pricing in the next two weeks, the true investor appetite for IPOs should become clearer soon.
