Bunge North America, Inc., the North American operating arm of Bunge Limited, a global, vertically integrated food and feed ingredient company has made a minority investment in and entered into a strategic relationship with Renewable Energy Group (REG) for the production of biodiesel.
The investment is part of a larger $100-million Series A private equity financing for REG led by NGP Energy Technology Partners, L.P., an affiliate of NGP Energy Capital Management. Strategic partner E D & F Man Holdings Ltd. also invested in the Series A financing.
In addition, Natural Gas Partners VIII, L.P., the Sargents, West Central Cooperative, and other Iowa investors participated in the REG financing. The $100-million financing is one of the largest investments in biodiesel in North America.
Renewable Energy Group, Inc., headquartered in Ralston, Iowa, was formed through the combination of West Central’s biodiesel business and Renewable Energy Group, LLC’s biodiesel plant construction business. REG is a full-service biodiesel company offering plant management, risk management, raw material procurement, plant construction, biodiesel production, and biodiesel sales and marketing services. REG has produced and sold biodiesel for more than ten years through its predecessor companies.
REG will use the new capital and strategic partnerships to expand its network of wholly-owned and third-party managed biodiesel plants. REG expects to increase its biodiesel production to approximately 640 million gallons by 2009, including third-party plants.
Currently, REG has three plants in operation (including third-party plants) with combined capacity of 72 million gallons per year; three third-party plants in construction with combined capacity of 90 million gallons per year; three third-party plants in the pre-construction phase with a planned capacity of 120 million gallons per year; and four additional REG plants under planning with capacities of 60-80 million gallons per year.
As part of the relationship, Bunge North America will supply raw material, risk management and logistics expertise critical to the growth and expansion of REG. Facilitating further production and transportation efficiencies, REG intends to co-locate biodiesel production facilities with Bunge North America oilseed processing facilities.
Bunge’s involvement in REG provides us an opportunity to create a strategic alliance with a market leader in the fast growing biofuels industry. It also provides us with a good balance so that we can effectively serve the food, feed and fuel markets.—Carl Hausmann, Bunge North America President and CEO