Chinese biomass energy company CN Energy Group has filed for an initial public offering (IPO) on the NASDAQ in New York. The company, which supplies wood-based activated carbon fuel, is looking to raise around $25 million through the US share sale.
According to the filing with the Securities and Exchange Commission (SEC) late last week, the Hangzhou-based company is planning to sell a total of 5 million of its ordinary shares. In its preliminary prospectus, CN Energy priced its shares at a range of $4 to $5 per share. The transaction's sole underwriter, Network1 Financial Securities, can opt to use the IPO's overallotment option to issue an additional 750,000 ordinary shares depending on the demand.
CN Energy mainly supplies its wood-based activated carbon to companies in the water purification, environmental protection, pharmaceutical manufacturing, food production, beverage production, and industrial manufacturing sectors. The company also operates through its subsidiary, Khingan Forasen.
The company has several manufacturing facilities located in Tahe County in China's Heilongjiang Province. Raw materials used in its production process are sourced from the Greater Khingan Range and Inner Mongolia. Apart from producing biomass products, the company also produces electricity for the country's power grid.
Electricity, which the company mainly sells to State Grid Heilongjiang Electric Power Co, is produced as a byproduct of the activated carbon manufacturing process. One of the company's largest clients for its activated carbon is Hangzhou Lianmu Technology Co. For its October 2019 to March 2020 quarters, CN Energy reported revenues of around $4.8 million. This represented a 21 percent year-on-year increase.
Over the same six month period, the company reported net profits of close to $700,000 after selling more than 3,816 tons of activated carbon and 1,159,917 kWh of biomass electricity. For its last fiscal year ending in September 2019, CN Energy reported a net income of $1.6 million on revenues of around $8.1 million.
The company announced that it will be using around 80 percent of the proceeds of the IPO to fund its construction of a new manufacturing facility in Manzhouli City. The rest of the funds will be used to bolster its research and development efforts along with other general-purpose expenses.
CN Energy plans to list on the NASDAQ under the ticker symbol "CNEY." The company has yet to announce when it will officially be listed on the bourse. In its prospectus, CN Energy included an audit conducted by an independent public accounting firm, Friedman LLP. It added that the audit was in accordance with the PCAOB standards.