Super Fund's $78.5m boost for LanzaTech

LanzaTech chief executive Jennifer Holmgren. The company turns waste gas from steel mills into ethanol and other high value fuels and chemicals.

Chicago-based biofuel firm hopes cash injection will see it to commercialisation.

Biofuel developer LanzaTech's coffers have been bolstered with a US$60 million ($78.5 million) cash injection from the New Zealand Superannuation Fund.

The Chicago-based company, founded in Auckland in 2005, uses gas-gobbling microbes to convert industrial waste gases into valuable chemicals such as ethanol.

LanzaTech is working with Chinese steel manufacturer Baosteel to establish a commercial plant, which is expected to open in 2016.

Chief executive Jennifer Holmgren said the Super Fund's investment would bring the total funds raised by LanzaTech to more than US$200 million.

"What this investment does is get us enough cash to take us all the way through to our first commercial unit," Holmgren said.

In March the company raised a further US$60 million from investors including Japanese and German industrial conglomerates Mitsui and Siemens.

The Super Fund said it had a 13.5 per cent stake in LanzaTech on a fully diluted basis. Other investors in the biofuel company include US venture capital firm Khosla Ventures and Sir Stephen Tindall's K1W1 fund.

The Super Fund's head of international direct investment, Nigel Gormly, has taken a seat on LanzaTech's board and will leave New Zealand for Chicago today to attend his first board meeting.

Gormly said LanzaTech provided the fund with valuable exposure to the alternative energy sector.

"We're actively working to diversify the fund alongside our traditional energy investments," he said. "We felt we could add value to LanzaTech as a shareholder."

LanzaTech is the Super Fund's third direct expansion capital investment after Silicon Valley solid oxide fuel-cell maker Bloom Energy and US wind turbine designer Ogin.

Such investments make up only about 1 per cent of the fund's $27 billion portfolio.

"It makes a lot of sense for long-term, growth-oriented investors like us to invest a small amount of expansion capital into companies that have great growth potential," Gormly said.

Holmgren said LanzaTech hoped the Super Fund's investment would be the last funding the company would have to raise before it reached commercialisation.

LanzaTech and Sir Richard Branson's Virgin Atlantic have been working together for three years in preparation for a world-first flight using low carbon fuel.

LanzaTech reported a $40.5 million loss in the 2013 calender year, compared with a $36.4 million loss in 2012, according to its annual report.

The company, which has received more than $14 million in New Zealand Government funding, shifted much of its previously Auckland-based research and development workforce to Chicago this year.

LanzaTech
*Uses gas fermentation technology to convert industrial waste gases into biofuel.
*New Zealand Superannuation Fund has invested US$60 million.
*Investment gives the fund a 13.5% stake in LanzaTech.