We're excited to announce our weekly segment published in collaboration with Stockhead.
As part of the weekly recap for Stockhead, our Director of Trading, Trent Primmer, was interviewed to share some trading highlights of the week!
Post-COVID bull markets have been defined in part by a flood of IPO activity, as companies look to take advantage of plentiful liquidity to take a run at the ASX boards.
At the halfway point of September, more than 100 companies have been listed successfully so far this year, with a strong pipeline still scheduled through the middle of October.
And Trent Primmer said it reflects something of a trend to ‘make hay while the sun shines’ as he noted that risk-on capital flows are still seeking strong pre-IPO returns.
- Trent Primmer, Director of Trading
In that context, Trent added:
“We’re trying to avoid being too heavily involved in the pre-IPO space, heading into the end of 2021.”
However, Primmer did highlight two pre-IPO companies BPC is working with, which are unique in terms of where they are looking to list.
One company in BPC’s advisory sphere is Verdant Earth Technologies, a clean energy play that’s developing the Verdant Energy Hub in the NSW Hunter Valley.
Barclay Pearce Capital is also advising Koch Metals, which is developing the Constance Range iron ore project about 280km from the Port of Karumba in North Queensland.
Why look abroad?
For Primmer, both Verdant and Koch operate business models that are subject to something of a ‘gap’ in Australia’s IPO market.
- Trent Primmer, Director of Trading
Trent says:
“For one thing, you’re targeting a much smaller pool of investors in this market looking to fund larger-scale renewable energy projects.
In that context, you’ve got a far better chance to tap US markets and secure not just investor funding but also government funding, and also have the company perform quite well at IPO.”
Primmer said it’s a similar situation for Koch Metals, where there’s “no happy medium” on the ASX for companies of Koch’s size.
- Trent Primmer, Director of Trading
On the opposite end of the spectrum you’ve got the traditional mining heavyweights, but not as much appetite for mid-size players.
Koch’s Constance Range project holds 242Mt iron ore identified as an exploration target, including 11.58Mt at grades of 57% Fe.
As it moves towards production, the company has entered into a (non-legally binding) Memorandum of Understanding (MoU) with a Vietnamese off-take partner for 1.5 million tonnes per annum.
In a recent investor presentation, the company flagged its preference for the LSE due to “greater access to capital, trade depth and recognition among London equity market investors”.
Trent said:
“From our perspective, we’ve got a lot of networks in UK capital markets that see value in an Australian iron ore development company of this size.”
- Trent Primmer, Director of Trading
Trent said:
“I think that’s notably different from even three months ago when people felt they had plenty of time to dot the I’s and cross the T’s with the relevant exchanges and get companies up and running.
But now the feeling is to do it quick smart and get the listing away on this side of the calendar year.”
To read the full Stockhead article, click here.
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