Get set for a revolution in animal feed.
If UniBio’s plans come to fruition it won’t be too long before the company orchestrates a major adjustment to the food-chain, and with very positive implications for the environment.
The company already has letters of intent for 110,000 tonnes of its key product, a biologically engineered animal feed manufactured out of methane called UniProtein.
The UniProtein price will be benchmarked against Peruvian fishmeal, as it has the potential to substitute fishmeal in a feed mix for, for example piglets.
So, at an average price between US$1,700 and US$1,800 per tonne the forward order book already stands at upwards of US$180 mln in forward orders, a tidy amount for a company that’s likely to have a market capitalisation of just £25 mln when it lists on the Aim market of the London Stock Exchange later this year.
“UniBio is a small company with the largest potential in the world,” says chief executive Henrik Busch-Larsen.
Indeed, the size of the market is hard to quantify but it could be immense.
What UniBio does is take natural gas and convert it into animal feed using a naturally occurring bacterial process.
It sounds simple enough, but the implications are profound.
Currently, it takes one hectare of land to produce 700 kilogrammes of soy, but the equivalent per hectare figure for UniBio is 25,000 tonnes.
That’s several orders of magnitude higher and represents a significant easing of pressure on scarce environmental resources.
Similarly, where it takes an estimated 600 litres of water (excluding rainwater) to produce one kilogramme of soy, it takes only five litres of water to produce the same amount of UniProtein.
Indeed, the environmental benefit is one of the key selling points as far as Busch-Larsen is concerned.
He’s already managed to secure several grants from the government in Denmark, where UniBio’s R&D facility is based, on the strength of the marriage between financial viability and environmental sustainability.
But now he needs more money to grow, hence the move to Aim.
The plan is to raise £15 mln through a fundraising being conducted by West Hill Capital and West Hill Corporate Finance, two London-based companies.
If successful that raise will represent the passing of a real “milestone” for the company, according to Busch-Larsen.
It seems likely that it will be successful, not least because of interest from companies that are likely to partner UniBio in the planned development of a global network of UniProtein manufacturing facilities.
UniBio will bring the intellectual property to these partnerships, with other parties contributing capital and construction know-how.
But the potential partners are also likely to support the Aim listing, encouraged by tests that show UniProtein to be eminently palatable to its key constituent audience, fish and animal, and by the ongoing support of the Danish government, , via its IFU fund for developing countries.
Why developing countries?
Well, the margins on offer at the various proposed UniBio plants will depend greatly on their location.
In Europe, for example, gas prices are high and margins are likely to be tighter.
In the US, on the other hand, where gas prices are lower as a result of the shale gas revolution, there’s more potential.
But there’s also significant interest coming out of West Africa, a region from which UniBio has already been successful in drawing significant levels of funding.
The margins on offer in West Africa run to around 50%, according to Busch-Larsen.
If that’s something he can convince investors he can take to the bank, then the success of the listing seems assured.
Ahead of that though, there are likely to be some interesting developments.
For a start, there’s a round of pre-IPO money being raised by Westhill, and the success of that undertaking will surely give a guide to how the overall listing will progress later in the year.
So far, says Busch-Larsen, it’s going “very well.”
Meanwhile, in September, UniBio will conduct an opening ceremony for its new pilot plant in Denmark, an event at which it’s hoped the Danish minister for Agriculture will be in attendance.
Also in the pipeline is the development of a new tailor-made protein for pig feed, for which UniBio has a potential buyer who’s prepared to pay a 40% premium.
This is a company with a real momentum behind it now that’s likely to make significant waves when it hits the market in the autumn.