China Biodiesel IPO on AIM - Friday

Evolution Securities Ltd are placing shares in China Biodiesel International Holdings Co. Ltd., which will be available on Friday on AIM. The Placing and Admission document can be obtained directly by contacting them. Website

The company has developed it own unique process for producing Biodiesel from waste oils using equipment designed and made to order. Mr Ye Huodong with his company ZYNE set up to research Biodiesel production and in March 2005 set up the first plant in Longyan in the Fujian Province od the PRC.

This is the first Biodiesel manufacturer in PRC, and they expect to expand production in Longyan and open a new plant in Xiamen , Fujian Province.

Key the the success of their operation is the catalytic primary stage process using unpatented (to secure confidentiality) methods. The process results in 3 fractions ;

1 = 7% of sales a feedstock for phosphate free detergents.
2= 19% of sales for producing toxin free packaging and plastics.
3 = 70% of sales of Biodiesel

Growth is anticipated as the demand for energy increases and entrants to the market need to have the skills that they lead in. Low wages, low material costs ... they are receving waste products, results in cost benefits over traditional diesel oils.

Also the PRC Government introduced the Renewable Energy Law in January this year which amongst may things encourages the development of recycling for Biodiesel. It is intended that 10% (The Placing document says 15%) of total energy in PRC will be available from renewable resources in 2020.The Standing Committee of the National People's Congress (NPC) endorsed the Renewable Energy Law on February 28 2006, significantly earlier than expected. President of the People's Republic of China Hu Jintao signed and announced this law.

In the past China lacked laws and regulations that support development of renewable energy. The economic policies were not constant and stable in supporting the renewable energy. Part of problem was that key equipment was dependent on import.

The U.S.-based Center for Resource Solutions, a renewable energy organization in the US has been working in China for 5 years on renewable energy and energy efficiency policy and expects the new law to make a big difference.

The company is registered in the British Virgin Islands and is subject to British Virgin Islands Law, as currently understood the company would not be subkject to the City Take-over code.

The risks are detailed and explained in the document supplied pages 20-27 which anyone contemplating investing should carefully examine.

The company expects to raise approximately £8 Mn. in placing 9.4 Mn shares (20.73% of shares in issue) at 85 p with a nominal valiu of US$0.01 each (1 US cent).

It will be interesting to watch how they perform given the excited interest there is in biodiesel and ethanol fuels and companies involved in their production in the US. There is no doubt that the potential within the Chinese market for such technology - given sufficent feedstocks is immense.

The opportunity to get in on the ground floor in an exciting and fast growing market where technological leadership is the key.

IPO - Initial Placing Offer

Today Friday 7th July 2006 China Biodiesel (CBI.L) closed at 104, UK Director Buckley from Evolution Securities bought 15,000 @ 100p (ish) . Smart money was out Wednesday @ 107 Bid.

Keep an eye on trading here