Initial Public Offering: Gevo, Inc.

Initial Public Offering: Gevo, Inc.

FI516: Advanced Managerial Finance

Sonya Beimert

June 5, 2011

An Initial Public Offering (IPO) is when a private company sells its first stock to the public. This is usually done by company’s who are smaller and or “younger” looking to raise capital in order to expand. It can however be done by larger private companies that want to become public. IPO’s can be a risky investment, as the investors do not know how the stock will do on its first day of trading, in addition, there are not much historical data either. In August 2010, Gevo Inc., filed for IPO with the SEC, which went public in January 2011.

Gevo Incorporated was founded in 2005 and known as Mechanotech, Inc. and changed its name in 2006 to Gevo Incorporated. Gevo Incorporated “is a leading renewable chemicals and advanced biofuels company.” (website) They are looking for alternatives to petroleum based products, by using “a combination of synthetic biology and chemistry”. (website) They were founded in 2005 and known as Mechanotech, Inc. and changed its name in 2006 to Gevo Inc.

Gevo filed with the SEC for their IPO in August 2010. In their filing with the SEC, Gevo notes that investing with their company provides high degree of risk. They go on to note that those that are interested in investing with them need to consider all the factors. One of the biggest factors is their financial statements have shown losses since their inception and notable in 2007 - $7.2 million; 2008 - $14.5 million; 2009 - $19.9 million and the first quarter of 2010 showed losses of $7.9 million. They go on further to note they are a developmental stage company and their revenues are limited and have not generated any from the sale of isobutanol. They also note as a risk factor that their operating results will fluctuate in the future and could result in failing to meet expectations of investors and their stock price could decline. They also have licensed intellectual property with...