Deal in focus: Capricorn et al. invest €36m in Avantium

A number of Avantium's existing venture capital backers took part in its latest funding round of €36m, including Capricorn Venture Partners, Sofinnova Partners, Aescap Venture, Navitas Capital, Aster Capital and De Hoge Dennen Capital, as well as ING Corporate Investments.

However, the funding round also saw a number of big-name corporates inject capital into the business, namely Swire Pacific, The Coca-Cola Company, Danone and Alpla.

Several of the participating trade players were already linked to Avantium through joint development agreements – while the businesses were funding Avantium through those agreements, they were not at that time shareholders in the company.

The funding round took approximately eight to nine months to complete; Avantium began to approach its venture backers last year. In October, Capricorn and Sofinnova directly approached Swire Pacific to begin the trade and venture syndicate.

"For all the investors, Avantium is the investment opportunity of this decade in the field of renewable and cleantech chemicals," says Claude Stoufs, a partner at Capricorn. The firm invested in the round via its €112m Capricorn Cleantech Fund 1, which held its final close in August 2008.

Amsterdam-based Avantium develops technology designed to convert plant-based materials into bio-based chemicals and bioplastics. According to unquote" data, the company has carried out at least three funding rounds prior to this one – and all of them have been relatively large for the Benelux region.

The business received €31m in February 2002 from a group of investors including DFJ Esprit and MVM Life Sciences Partners. According to unquote" data, €11m came from the conversion of an existing convertible note issued by an investor consortium in 2001. Existing shareholders also provided €8m in equity to the round.

Aescap then led an €18m round in October 2008 with participation from Capricorn, Navitas and ING.

In June 2011, Sofinnova, Aster, De Hoge Dennen and existing investors Aescap, Capricorn, Navitas and ING injected €25m into the company alongside a €5m subsidy and innovation credit from the Dutch Ministry of Economy, according to unquote" data. Some of the capital was used to buy out the stakes held by DFJ Esprit and AlpInvest, among others.

Combined attractions
Stoufs explains what makes Avantium such an attractive and high-value company: "For investors, it is the combination of a revenue-generating company – thanks to its catalyst business – and its technology platform, which was the origin of the most visible new product: a new polymer having the potential to replace PET [polyethylene terephthalate], initially for bottle applications, which is a $30bn global market, and later on for fibres and film applications – an aggregate $100bn global market.

"In addition, the monomer produced by Avantium has other potential applications, such as for plasticisers. Avantium's technology platform is also pursuing other renewable chemicals, with those developments being at an earlier stage," says Stoufs.

The fresh funding will allow Avantium to further advance towards commercialisation of its PEF product, which is a 100% bio-based plastic designed to allow for lighter, thinner and stronger bottles, as well as extending shelf-life. "PEF  enables production of a 100% renewable polymer with barrier, thermal and mechanical properties far superior to PET," says Stoufs. "This, in a snapshot, explains the major interest of brand owners like Coke and Danone for Avantium's first product."

The substantial capital injection will also allow Avantium to work towards the launch of its first commercial plant, which it hopes will be operational by 2017. Indeed, in keeping with the current theme running through Europe, the company is considering beginning preparations for a potential IPO to raise the funds required to build and launch its first commercial plant, says Stoufs. With the backing of such big names in both the trade and venture capital worlds, appetite is sure to be high.

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• Topics
• Benelux
• Expansion
• Industrials
• Netherlands
• Sofinnova Partners
• De Hoge Dennen Capital