Carbios - Closer To Industrialisation With First JV
Edison | Jun 10, 2016 07:41AM ET
Carbios (PA:ALCRB) has announced its first joint venture, Carbiolice, in partnership with Limagrain and SPI. This is a key step and will combine Carbios technology with Limagrain’s industrial and commercial expertise in a €29.5m project to be developed over four years. Demand is supported by French legislation, which will enforce the use of bio-sourced and biodegradable plastics for certain bags from 2017. Our valuation range is unchanged, €23-37/share.
Carbios has announced its first industrial joint venture, earlier than it expected. With existing partner Limagrain and venture fund SPI, the company will create a JV, Carbiolice, to focus on developing biodegradable plastics for plastic bags and mulching films. The venture will use Limagrain’s existing production facilities, where it produces and commercialises bioplastic, but with a different technology. Carbiolice will progressively integrate Carbios’s enzyme, depolymerisation and biodegradation technology. These add specific characteristics, such as controlled degradation and greater resilience. Demand is assured, as French law requires fruit and vegetable plastic bags to be biodegradable from 1 January 2017, although the Carbiolice product will not be ready by then. The JV, over four to five years, will integrate the Carbios technology, while moving to industrial and commercial scale, benefiting from Limagrain’s expertise. Total investment will be €29.5m in three phases over four years, of which €11m will be funded by SPI, building to a 37% stake. It is worth noting that the other partners will altogether have to fund 30% each time SPI commits investment.
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