Below is an article by Finwire.
Biogas company Biofrigas raised SEK 10.6 million before issue costs in a rights issue that was 71.3 per cent subscribed.
“We have now secured the capital needed to continue our commercialisation efforts and carry out the activities that are vital to the company’s continued development,” CEO Erik Fromell told Finwire once the final outcome was confirmed.
He describes the result as a sign of strength.
- It demonstrates strong confidence from both existing and new investors in Biofrigas, our technology and the market in which we operate.
A significant portion of the issue was subscribed without the support of subscription rights. According to Erik Fromell, this suggests that the company has reached new investors.
- I believe it is the combination of a growing market, a clear customer need and the fact that we have now verified our technology in commercial operation that has made the company attractive to more investors.
As for any changes in the ownership structure, he views the apparent broadening of the shareholder base positively.
Following the share issue, the focus is on accelerating commercial activities, strengthening market presence and continuing to develop the business in line with the communicated strategy.
The capital will primarily be used to scale up sales efforts and convert business opportunities into concrete deals.
- At the same time, we must ensure that we have the capacity to handle upcoming project deliveries and continue to develop our products in line with market needs. This result puts us in a position to continue implementing the strategy and expansion plan we have communicated.
Biofrigas continues to see strong market activity. According to Erik Fromell, the shift the company has previously described is now becoming increasingly clear.
- The electrification of bus fleets is reducing demand for compressed biogas in many regions, whilst demand for liquid biogas is rising sharply in heavy transport, industry and shipping.
Meeting a concrete market need
This creates a need for small and medium-sized biogas producers to find new and more profitable outlets for their gas. According to Erik Fromell, there is significant interest in the company’s products and a continued willingness to invest in the segment. - We see that our solutions meet a very concrete market need.
According to Erik Fromell, the most important signal to the market following the share issue is that the company now has both the capital and the confidence of investors to continue its commercialisation efforts.
- We have validated the technology in commercial operation, we see a clear market need, and our focus is now on turning this into business and long-term value creation.
He also believes that the market still underestimates the advantages of liquid biogas compared to compressed biogas.
- When biogas is liquefied, its energy density increases several-fold, making it significantly more cost-effective to transport.
For producers, this means the opportunity to reach a larger geographical market and more customers whilst maintaining profitability. For users in, for example, the transport sector, the higher energy density means a longer range between refuelling stops and greater efficiency.
- This means that a biogas producer switching from compressed to liquid biogas not only gains access to a growing market, but can also reach more customers and achieve better profitability throughout the value chain.
- It is one of the key drivers behind the market development we are seeing today and something that is entirely in line with Biofriga’s positioning, concludes Erik Fromell.