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Last month I discussed the NanoDynamics, Inc. (ND) IPO and why it, as probably the first successful nanotechnology IPO in four years, could change the nanotechnology public funding landscape. (The road show' for the IPO has already begun.) I have received much agreement on the article from both the financial and the technical community. In that article, I described how ND's products were strategic "nano - green" solutions that were close to marketable products and how positive that was for the IPO. I also mentioned that the IPO funds were destined to create production (not research) facilities for active product introduction and marketing leading to real sales and near term profits. Last, I mentioned ND's strong management. Because of these elements, it was clear to me that the IPO would be successful. However, my treatise was incomplete!
July 20th, 2007
The NanoDynamics IPO - Part 2
The NanoDynamics IPO - Part 2
Surprise, Nanotech and Green
Alan B. Shalleck
Last month I discussed the NanoDynamics, Inc. (ND) IPO and why it, as probably the first successful Nanotechnology IPO in four years, could change the nanotechnology public funding landscape. (The road show' for the IPO has already begun.) I have received much agreement on the article from both the financial and the technical community. In that article, I described how ND's products were strategic "nano - green" solutions that were close to marketable products and how positive that was for the IPO. I also mentioned that the IPO funds were destined to create production (not research) facilities for active product introduction and marketing leading to real sales and near term profits. Last, I mentioned ND's strong management. Because of these elements, it was clear to me that the IPO would be successful. However, my treatise was incomplete!
ND had something special in the works to enhance an already interesting IPO offering and it was significant. In ND's amended July S-1/A (and during the supposed "quiet" pre-offering period) ND revealed that it had formed a joint venture with Royal Dutch Shell, called Epik Energy Solutions LLC, and here is the surprise Royal Dutch Shell had invested $10 million (in convertible debt) in ND's energy focused IP and development effort through Epik to pursue value-added applications of ND technologies in the fields of oil, gas and hydrocarbon exploration, production, transmission and processing and solar energy. More interestingly, the debt is convertible to ND common at 110% of the IPO offering price.
Look what had occurred. In the middle of an IPO quiet period, a major company, Royal Dutch Shell, had endorsed ND's technology and bought a piece of NanoDynamics through a subsidiary. Granted $10 million is small potatoes for a major oil company - but it is more than 10% of the projected amount of the ND IPO and it represents a major endorsement of ND's viability. The ND IPO now is really $110 million, not $100, and $10 million has effectively been sold before the IPO comes to market. I'm not going to comment on whether or not the Epik arrangement should have been anticipated in the original draft S-1 that really doesn't matter. What matters is that the joint venture is now disclosed and that disclosure makes the ND IPO offering significantly more attractive.
I said last month I would elaborate on the connection between nanotech and green. That nanotech and green are intertwined in ND's strategic positioning is significant for the ND IPO opportunity. The unique technical reasons are: massive surface area for efficient reactions, greatly improved reactive characteristics because of size, and little or no waste.
If you examine most third world economic and green problems (as I have during the last 90 days) potable water, sufficient energy, overwhelming pollution, poor sanitation, rampant disease, poor healthcare, unemployment, etc. and the developed world's eco and green problems aging infra -structures, environmental pollution, energy inefficiency, global warming exhaust gases, water pollution, water supply, poor health services, solid waste disposal, disease prevention and cure, filtration, power generation and storage, etc. you discover that most of the accepted, and future, high probability solutions involve nanotechnology directly or include critical nanotechnology components. In most instances the critical path to successful economical mitigation of any eco-green problem is the nanotechnology element or component. Note that nano and green are now intertwined and fellow travelers for major sectors of the world economy.
A representative example is potable water availability. Potable water is a geo-political conflict topic for this century. Most easily accessible ground and sub-terranean water is brackish, leading to worldwide shortages of life sustaining water. No generally acceptable and affordable solution has been postulated to solve the metal, inorganic and organic contamination of brackish water so that billions of people can have drinkable and safe water. Nanotechnology has some answers. There is a worldwide effort within the nanocommunity to create technology that purifies water. Whether a successful design comes from small companies such as Crystal Clear Technologies of Oregon offering low-cost nanocoated porous substrates suitable for both consumer and municipal/global water purification, or nanoparticle structured filters containing nanosized iron (a la ND's design) or nanosized pores in low cost filter membranes, all inexpensive and effective water purification designs contain nanotechnology.
There are similar connections in power generation and fuel cell design. Solid oxide fuel cell electrodes can best be designed with the porosity and surface area needed to improve performance and bring down costs using nanotechnology particles and nanosized ceramics. In membrane-based fuel cells, nanopores are the sole way to increase throughput and efficiency. In power generation, most projected exhaust gas cleaning and gas sequestering solutions involve nanotechnology-based sensors and nanotech catalyzed reactions. Using nanotech improved materials allow power-generating reactions to occur at higher temperatures resulting in cleaner and more efficient fuel conversion.
In sum, nanotech and green have merged and are mutually supporting. Economically, there are massive funds available worldwide to purchase and install successful designs and equipment. ND has seen these possibilities and is setting the example for the industry. The door is opening this month I hope many of you nanotech entrepreneurs follow the ND example. ND's IPO is an industry changing event. *
* Note: I own no stock in ND nor do any of my companies.
Alan B. Shalleck
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