David Bayer · Fri, 04/09/2010 - 14:18
Business
Business Overview:
Ethanol production for captive Colombian market.
Project Type:
Industry:
Project Location:
TBD, BOL, TBDColombia
Who is the Customer?:
For the ethanol produced, there are only 5-6 gasoline wholesalers in Colombia, 5 of which are multinational corporations. They are mandated by law to buy all the ethanol produced in the country, pick it up at the plant in their own trucks and take it to their own blending centers. Its a captive market and that's why it doesn't require to have an off-take agreement in place.
For the electriucity generated with the biomass, there's a signed PPA with a local power distribution company, and it's worth US$106M and good for 12 years.
What is the Customer Pain that you are solving?:
There's not enough ethanol to meet demand, and the amount of ethanol needed in the country will double in 2012.
What is the Target Market?:
The ethanol market in Colombia is warranted by law. Major distributors of gasoline have the obligation to blend 10% of ethanol within the gasoline in the main cities of the country, as long as the internal market grows, after 2012 the mandatory blend will be 20%. The internal price of ethanol has been set taking into account the price of refined sugar, variations in the exchange rate and inflation, and at present is 250% higher than the FOB price of ethanol in Brasil. Imports are restricted and exports are forbidden until the domestic market is satisfied. At the moment, the total production of ethanol in Colombia is 770.000 liters per day and the national demand is 1.520.000 which means an unsatisfied demand of 50% approximately.
How big is the Target Market in terms of Annual Sales?:
$600M-$1B
Competition:
There's no competition because the ethanol plants currently operating in Colombia are supplying only a fraction of the market needs, and they are only serving a few of the cities in the country.
Since the price is set by a government tariff, there's no price war either.
One-line Pitch:
Best ethanol deal available in South America.
Well-structured, amazing ROI, great team, all permits in place, feedstock procurement guaranteed.
In brief, one of a kind deal in a fast growing market.
Business Model:
Our Client is a group of three (3) companies located in Colombia: it is a renewable energy complex that produces clean energy using as main feed stock sugar cane. These companies will generate annual sales averaging one hundred and thirty million dollars (USD $ 130.000.000) per year, divided in: Ethanol (82,3%), electric power (6,5%), potassium sulfate (6,4%), organic compost (2,1%), vegetable protein (2.1%) and liquid carbon dioxide (0,5%).
Technology
What makes the technology/business unique and have a defendable competitive advantage?:
Location, location and production.
It's the closest ethanol plant to the largest city/market in the country. Only 3 hours away, this plant will sell all of its production to the gasoline wholesalers providing gasoline to Bogota.
Moreover, the plant is also 3 hours away from another city that is currently not being supplied with ethanol and could also absorve all of its production.
The area's special conditions for growing sugar cane ensure that it will yield more per hecater planted and per ton harvested than most other plants worlwide.
Describe in detail the technology used in the Project - Address the innovation in significant detail :
The project developers hired some of the best technical individuals in ethanol production globally. With them they visited the largest ethanol equipment production countries and companies, and selected the best technology for their specific needs, making sure that all fits perfectly without incompatibility issues.
Team
| Name | Title |
|---|---|
| Michael P. | President |
| G. Sinisterra | CEO |
| Carlos R. | COO |
| Arno J. | CTO |
| Peter Glaum | Other |
Current Investors:
Biofuel
Alcol Tech
Financials
Amount Sought:
$45,000,000 If raising funds, what shall the funds be used for?:
A. Paying for capital equipment
B. Paying for special machinery
C. Paying for civil works
D. Payroll
E. Other
This is an LTV, in which with the money collected from the investor, plus the loans received, the total project will be built up in 18-24 months and will be operational.
The current investor/owner will not cash out any of the money.
Pre-Money Valuation:
$150,000,000
Funding Received to Date:
$7,000,000
Amount invested by Founders:
$6,000,000
Funding Stage:
Pre-Revenue
Internal Rate of Return (IRR):
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