Infinity Bio-Energy (IBI) is listed on Aim. The company is actively acquiring ethanol assets in Brazil.

International AIM - Infinity Bio-Energy

First published in Cleantech magazine March 2007 ©  Cleantech Investor Ltd 2007

 Infinity is actively participating in the rationalisation of the Brazilian sugar and ethanol industries and looks set to become a significant player in this growing market. Infinity Bio-Energy shares were listed on AIM in May 2006. In August the company agreed to acquire controlling interests in three sugar and ethanol production businesses in Brazil, Coopernavi, Alcana and Cridasta.

Coopernavi, the first dea, ranked as a reverse takeover under the AIM rules. The Coopernavi deal included industrial assets, Usinavi, and agricultural assets in Matto Grosso do Sul. It cost Infinity $141 million for 91% of the assets. The deal includes forward purchases of over 30,000 hectares of sugarcane and a plant with the capacity for processing over 2.2 million tons of sugarcane. Usinavi crushed 2.06 million tons of sugarcane in 2006, generating 127,000 tons of sugar and 92 million litres of hydrous ethanol. It is expected to crush 2.8 million tons of sugarcane by 2008. Infinity acquired controlling interests in Cridasa and Alcana for a combined total of $111 million.

The sites are positioned to serve the internal Brazilian market, focusing on the states of Espirito Santo, Bahia, Minas Gerais and Rio de Janeiro – as well as serving the international market. Alcana crushed 545,000 tons of sugarcane in 2006, producing 28.7 million litres of hydrous ethanol, 2.86 million litres of anhydrous ethanol and 13,000 tons of sugar. By 2008 it is expected to have crushing capacity of 1.45 million tons. Cridasa, located in Espirito Santo State, crushed more than 410,000 tons of sugar cane and produced 11.5 million litres of hydrous ethanol and 18 million litres of anhydrous ethanol in 2006. The target for Cridasa is to achieve a crushing capacity of 1.35 million tons by 2008.

Infinity’s results for the period ending December, reported in February, include these acquisitions since the respective completion dates. The shareholding in Usinavi was increased to 97.5% in December. For the nine month period, revenue was $20.25 million and pre tax profit was $7.2 million. Average capacity utilisation at the mills acquired was 55% in 2006 and is expected to improve to over 75% in 2007. Infinity aims to reach full capacity utilisation by 2008. Combined crushing capacity of the three existing mills should be more than 4.1 million tons in 2007 and 5.6 million tons in 2008 (vs. 2.5 million tons in 2006). In addition, Infinity has plans for the development of five greenfield projects.

Infinity has followed up on the 2006 investments with plans for two further acquisitions valued at a combined $200 million. The company has agreed to acquire 50% of Destilaria Itaunas SA (Disa), a sugar and ethanol facility in Espirito Santo state, and 50% of Pecana Empreendimentos e Participacoes SA (Montasa), an ethanol only plant which will come online in 2008. The two should provide a combined 4.5 million tons of crushing capacity within a radius of less than 100 kilometers from Alcana and Cridasa. Disa has a co generation business with a long term power purchase agreement from Electrobras. The deals should be finalised in April.

Infinity is also reportedly planning to invest $20 million on a plant in the Caribbean for the dehydration of Brazilian ethanol. Ethanol produced in the Caribbean can be sold to the US without the imposition of the 54 cents per gallon tariff which the US imposes on ethanol imported directly from Brazil. The shares represent an opportunity for AIM investors to gain exposure to the fast growing Brazilian ethanol and sugar industries.