Author: David Robinson
AIM statistics have made rather depressing reading in the last couple of years. A recent FT poll of AIM nominated advisors (nomads) found the majority expected the number of IPOs this year to fall under 40 – and more than 40% of the nomads polled expected the total number of AIM companies to fall to less than 1000, meaning a net loss of 100 plus.
But a recent spate of actual and proposed resources deals – mining, oil & gas, commodities, energy exploration generally and the technologies that support these industries – has sparked some life back into the market and ignited a degree of optimism. But are these really signs the market is picking up?
We ourselves have advised on no less than four resources deals in the last few months: in May the listing of New World Oil & Gas (where we acted for the nomad and broker), raising £3m by way of a placing of new Ordinary Shares at 5 pence per share with a view to acquiring interests in oil and gas assets; then acting on New World’s subsequent secondary fundraising of £3m; in June the listing of gold exploration company Touchstone Gold, raising £10m and giving the company a market cap of £28m, to fund the company’s next phase of gold exploration in Colombia. This deal in fact accounted for over 10% of new money raised on AIM this year by itself at the time; and also in June the re-admission to AIM of BidTimes, (now called Powerhouse Energy Group), following its acquisition of California based clean power technology company Powerhouse, with a market cap on admission of £49m. And these deals were in good company. Elsewhere in the market we saw the arrival to market of 3Leg Resources focussing on shale gas projects in Poland; MyCelx, specialists in cleaning water for the oil and gas industry; and Enteq Upstream, providing specialist technologies to the oil & gas market.
Driven by a voracious market for physical commodities that is feeding the growth and ambition in a very hungry China, resources deals are pretty much the only transactions that have been able to get off the ground in recent months. But we are seeing signs of change: companies in other sectors being brought to market – in our case particularly in the technology and healthcare sectors. Certainly the market remains dominated by resources listings, but we are gradually starting to see a broader spread. Is this an indication of a general up-tick in bringing companies to market? Or is it more a case of investors (fund managers in particular) fearing over exposure to the resources market – and/or a sense that this sector has probably peaked?
The answers to these questions will no doubt become clear in the course of time. In the meantime this activity on the AIM market is very welcome indeed.
David Robinson, Partner, Fladgate LLP (firstname.lastname@example.org)