Water Tower Research Fireside Chat Series: Project Finance and Gevo’s Growth Strategy

We are pleased to host Pat Gruber – CEO of Gevo Inc. (GEVO) – in our Water Tower Research Fireside Chat Series. Gevo, Inc. is a next-generation “low-carbon” fuel and chemical company focused on the development and commercialization of renewable alternatives to petroleum-based products. The company sells renewable jet fuel, gasoline hydrocarbons, and isobutanol, which have been shown to have superior performance relative to petrochemical based fuels including higher energy, clean burning, and lower particulates. GEVO has already proven that its proprietary process works at a commercial scale. As such, the company believes it has been de-risked in many aspects and at a key inflection point to move into commercial-scale production serving a significant total available market (TAM). You can read our Initiation of Coverage Report HERE.

The topic of the Fireside Chat will be the project finance effort currently underway at the company. 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. GEVO is actively engaging potential investors through their banking partner – Citigroup – 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.