Nine companies to watch as AIM flotations crank up

12th November 2021 14:51

by Andrew Hore from interactive investor

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These technology, energy efficiency and copper mining businesses plan to float on AIM in the coming months. Our award-winning AIM writer runs through each one.

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After a lull in the late summer and early autumn AIM flotations are gaining momentum, and there are plenty more companies wanting to float this year. Whether they will all be able to do so is another matter: the route to market appears to be increasingly congested not just for AIM but for the main market as well.

Travel Chapter, the online UK holiday rental platform, announced its intention to join AIM on 21 October and then decided to postpone the admission on 9 November. Just like many other companies that pull their flotation, Travel Chapter says that it had considerable institutional investor support. It may be that this support was not at the right price, though. Management blames market volatility for the change of mind.

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Other companies continue with their plans to join AIM before the end of the year. Energy efficiency/cleantech and mining companies dominate those that are still on course.

Life Science REIT

Individual investors have the chance to participate in the Life Science REIT flotation. There is an intermediaries offer, and investors can apply for shares via Interactive Investor. A 4% yield is being targeted, based on the issue price of 100p a share, with annual growth of 5%.

Life Science REIT will be the first London-quoted REIT focusing on life science properties. The types of property will include laboratories, offices and manufacturing facilities and they will be situated in Oxford, Cambridge and London. There is strong demand for these properties from companies and organisations, and a lack of supply. It is estimated that up to 20 million square feet of additional office and laboratory space will be required over the next two decades.

The target for the offer and placing is up to £300 million. There will also be borrowings to fund acquisitions, although loan to value will be kept to 30-40%. There are exclusive or advanced negotiations relating to £305 million of property investments. That figure includes £220 million of tenanted properties yielding 5% and £85 million of development opportunities. The cash raised should be invested within six months.

The estimated NAV will be 98p a share after expenses. Ongoing annual expenses could be around £4.2 million. The maiden dividend will cover the period from admission to June 2022.

Panmure Gordon is nominated adviser and joint broker alongside Jefferies. The intermediaries offer closes at 2pm on 16 November.

Atome Energy

South America-focused oil and gas firm President Energy (LSE:PPC)is spinning off Atome Energy, a company it set up earlier this year to seek projects for hydrogen and ammonia production. President owns 85% of the company and is seeking court approval for a capital restructuring that will allow it to distribute up to 60% of Atome to its 600 shareholders. The other 15% is owned by Alpha Oil, a company belonging to President’s boss Peter Levine.

Atome is developing projects in Iceland and Paraguay. It owns 75% of Iceland company Green Fuel and 100% of Atome Paraguay, which has signed a memorandum of understanding with the national electricity company for the supply of up to 250 megawatt (MW) of power. Initial production is anticipated before the end of 2023. Cash will be raised at the time of the flotation.

Beaumont Cornish is nominated adviser and finnCap is broker.

Gelion Technologies

Australia-based Gelion Technologies is a zinc-bromide battery storage company that came out of the University of Sydney. It plans to raise £16 million and could be valued at more than £120 million.

Gelion (www.gelion.com) has already raised £6 million from investors in the UK, Australia and Asia ahead of the flotation, which is expected in November. finnCap is the nominated adviser and broker.

The technology has stationary and mobility uses. Gelion Endure batteries are suited for harsh environments and the non-flow zinc-bromide technology means that they can be smaller and are recyclable. They can be used in mining, agriculture and irrigation.

Gelion has signed a memorandum of understanding with Mayur Renewables to supply scalable non-flow zinc-bromide battery technology for use in Papua New Guinea. An initial 100 megawatt hour (MWh) of energy storage will be supplied between 2022 and 2027.

The mobility batteries are based on lithium-ion and lithium-sulfur. They could be used for automotive or aviation. A low-cost additive has been developed that can more than quadruple the lifetime of a lithium-sulfur battery.

Eneraqua Technologies

Eneraqua Technologies is an energy and water efficiency business. It supplies retrofit district heating systems, using its own control flow technology to improve efficiency. The same technology is also used for water efficiency by eliminating flow fluctuations and potentially cutting consumption by one-fifth.

The core subsidiary of Eneraqua is Cenergist Ltd (www.cenergist.com). In the year to January 2021, Cenergist increased revenues from £10.8 million to £14.5 million, but pre-tax profit slumped from £1.63 million to £852,000 – partly due to higher directors’ pay. There was a small cash outflow from operating activities due to increased working capital. Two subsidiaries have been acquired since January and accounts can sometimes be restated prior to flotation.

Eneraqua is raising £12 million at 277p a share and plans to join AIM at a valuation of £92 million on 22 November. Existing shareholders will raise £8 million. finnCap is nominated adviser and broker.

Recycling Technologies Group

Recycling Technologies Group (www.recyclingtechnologies.co.uk) wants to raise up to £40 million for expanding the company and join AIM in December. There are plans for a PrimaryBid offer.

The Wiltshire-based company has developed a modular machine called the RT7000, which can process hard-to-recycle plastic into synthetic oil that can be sold to make new plastics. Currently, only 12% of plastic is recycled. The plan is to manufacture and then sell it around the world. The first machine will be installed in Scotland and should be up and running before the end of 2022.

Petrochemicals company Neste is a shareholder, and it is licensing the technology and buying the synthetic oil, which is called Plaxx. INEOS is co-developing a polystyrene to styrene process with the company. There are other partners around the world.

Stifel Nicolaus is nominated adviser and broker.

Ashtead Technology

Subsea equipment rental company Ashtead Technology provides services to the oil and wind energy sectors. Demand from the latter is growing rapidly – the offshore wind market is expected to grow by 19% a year between 2020 and 2025.

Aberdeen-based Ashtead Technology initially focused on the oil and gas sector and moved into offshore wind in recent years. Services provided include project development, installation and maintenance. The company says that 2021 revenues will be at least £52 million, up from £47.8 million.

Numis is nominated adviser and broker and the proposed admission date is 23 November.

DSW Capital

Warrington-based professional services firm DSW Capital wants to raise £5 million and join AIM in early December. DSW licences the DSW brand in return for royalties based on fee income. The DSW network has 81 fee earners in England and Scotland.

In the year to March 2021, DSW Capital increased its revenues from £1.76 million to £2.46 million, while pre-tax profit jumped from £1.06 million to £1.62 million. NAV was £2.39 million, with net debt of £318,000. This is based on a filing at Companies House and the business may be restructured when it joins AIM.

Shore Capital is nominated adviser and broker.

Central Copper Resources

Central Copper Resources is a company that initially flagged its AIM flotation back in July. Others have fallen by the wayside, but the mining company still appears on course for admission before the end of the year.

The company has production and exploration assets in Zambia and the Democratic Republic of the Congo (DRC). Cash raised in a placing will go towards advancing the Mbamba Kilenda copper project in the DRC, plus exploration at other projects.

Mbamba Kilenda has a mineral resource estimate of 11.8 million tonnes (Mt) of copper at 3.13% and a pre-feasibility study should be completed after the flotation. The initial plan is to produce 30,000 metric tonnes of copper a year by the fourth year of production.

Strand Hanson is nominated adviser, while Brandon Hill and Fox-Davies Capital are brokers.

CopperZone Resources

Another potential copper miner planning to join AIM in the next few weeks is CopperZone Resources, which wants to raise between £5 million and £7.5 million at 20p a share. The pre-money valuation is £5.2 million. Sprott Global currently owns 33%. Fox-Davies Capital is the broker.

The move to newer technologies, such as electric vehicles, will create additional demand for copper. CopperZone Resources classes itself as a project generator, whereby it completes early-stage exploration and then when it has firmed up the prospect it brings in a partner to finance further exploration.

The current focus is Zambia, which has a history of copper mining. CopperZone Resources has 11 copper licences in three areas: Chimpatika, Kalindi and Lufwanyama. There are also options over three other prospects.

Chimpatika is the main focus of this year’s work programme. Geochemical sampling and exploration drilling is planned. There will also be follow-up worth on three target areas in the Chakwa prospect at Lufwanyama, which is to the west of the main Zambian copperbelt.

On top of this Rio Tinto (LSE:RIO) will be funding the $500,000 for project data reappraisal and drill testing at the Kalindi joint venture. Rio Tinto has earned a 51% stake and can earn a further 19% stake by spending an additional $3 million.

Andrew Hore is a freelance contributor and not a direct employee of interactive investor.

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