Kedco tests water for interest in clean energy

By John Murray Brown
Published: October 20 2008 03:00

Proponents of clean energy technology say the nascent industry is attracting lots of investor interest.
Their claim will be put to the test today when a small Irish company involved in food and wood waste electricity generation starts trading on Aim.
Kedco, which raised €16m (£12.4m) in a private placing in July, is priced at 17p a share, valuing the Cork-based company at £35m.
Donal Buckley, chief executive, hopes the listing will raise the company's profile and make it easier to raise funds, with a £250m pipeline of projects. He says he will be looking to raise new money in early 2009.
Kedco was founded in 2005 making it almost an old timer in this fast-evolving corner of the energy industry. It has linked with US and European technology companies to provide biomass waste energy for local authorities, food companies and agricultural operators in Ireland and the UK, using both wood waste gasification technology and a food composting process called "anaerobic digestion".
Kedco supplies the power generation plant, handles the sale of electricity, and in the UK earns money from the sale of credits known as ROCs or renewable obligation certificates. Green energy companies trade these for cash, allowing the traditional dirty industries to meet carbon emission commitments.
The Irish company also takes a fee for handling certain waste materials, and is able to sell some of the by-products of the process such as charcoal and compost.
Mr Buckley says bank debt accounts for about 65 per cent of funding. In recent talks with bankers, he says: "We got what we wanted - and some. Banks these days want to lend to cashflow."
Today's listing will not involve the issue of new shares. Retail investors make up two-thirds of the shareholder base.
Among the institutions, FBD, the Irish agricultural insurance company, owns about 35 per cent.
How much liquidity there will be in the stock remains to be seen. This has been a big problem for small Aim companies in the last couple of years.
While much of the green lobby's attention is on wind energy, Mr Buckley, an agricultural scientist by background, believes biomass has a much better future. With the new tighter European Union restrictions on the use of landfill, there is no supply problem.
All European governments are looking to reduce their dependence on conventional fossil-based energy generation.
Last week, for example, the Irish budget increased the renewables target from 33 per cent of overall energy supply to 44 per cent by 2020.
Kedco is on its own at the moment. "Sometimes I worry about the lack of competitors. We have early mover advantage but I know it won't last forever."
Copyright The Financial Times Limited 2008