The company behind plans for a green jet fuel plant on the South Humber Bank has launched a £32 million fundraiser, with strong early take-up.
Velocys has secured £12 million from Carbon Direct Capital, a New York-based investment firm focused on climate impact initiatives, with more than £6 million set to flow through a placing of shares and a retail offer to existing shareholders.
CDC has partnered with a number of transformative carbon tech companies across two growth equity funds, with vice chair Nili Gilbert recently named one of the 100 most influential women in US finance. The buy-in comes via unsecured convertible loan notes in the waste-to-fuel Oxford University spin-out, with the deal structured to incentivise a US listing of Velocys, within 21 months of issue. The notes would be switched to shares once then trading.
Read more: Velocys chief executive underlines 'solid platform to deliver' on global green jet fuel ambition
Henrik Wareborn, chief executive, said: “There is global recognition of the urgent need to replace fossil derived fuels with sustainable equivalents in order to tackle climate change. Velocys provides a unique technological pathway to the economic production of drop-in sustainable aviation fuel, which can decarbonise the aviation industry without the need for any aircraft engine modification. Put simply: we believe that we have a ready-to-go solution to the challenge of making aviation environmentally sustainable.
“The commitment from Carbon Direct Capital, which has partnered with a number of transformative carbon tech companies, to conditionally subscribe for a minimum of $15 million of convertible loan notes provides further demonstration of the increasing global awareness and expert validation of Velocys’ proprietary technology.
“We have a highly scalable business model, partnerships with some of the world’s leading technology companies and airlines, and a growing business development pipeline. We are well-positioned now to move on to the next stage of our growth, and we are excited by what the future has in store.
“Our ambition is to become a leading provider of innovative SAF solutions to enable the decarbonisation of the aviation industry.”
Discussions are underway with additional potential convertible loan note investors with hopes to match CDC’s commitment.
It comes after Velocys recently passed the threshold of private investment and work milestones to draw down a first tranche of grant funding from the UK government to support the Stallingborough plant’s development.
This raise will further match-fund some of the remainder of the £27 million ring-fenced for the £350 million project, which is also backed by British Airways.
Project delivery and engineering scale-up are highlighted for the proceeds, alongside initial commissioning of an Ohio manufacturing facility for its Fischer-Tropsch synthesis technology, the key factor in the conversion of black bin bag waste to fuel.
All investments will be subject to the passing of resolutions by shareholders at a meeting next month.
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