Where are high net worth investors searching for bargains? - Live on ausbiz
After a rough 18 months, Trent says that momentum is now ripe for companies to dip back into the market and ask for extra cash. Trent also highlights that the rotation from US big tech into pre-IPO and smaller names is good news for the markets. He's even finding companies are lining up for dual and triple listings on overseas exchanges.
Where high net worth investors are searching for bargains
Read the conversation:
"Stick in the stock market, let's talk about capital raises. Our next guest has been involved for an up and coming iron ore producer to tell us about the environment in general as well. Let's have a chat to Trent Primmer from Barclay Pearce Capital. Hi, Trent. Welcome back to the program. Still plenty of money looking for a good deal. So how is the capital raise businesses?"
"For sure. A pretty bumpy year with the market, obviously tracking higher. I think coming out of COVID, we've seen a lot of companies, a lot of corporate clients wanting to essentially take the ball and run with it and close off some of their listings prior to the end of the year. I think the ASX currently is tracking about one listing per day, I would expect to say a bit of momentum and obviously a pickup in listings in the last three months of the year. So, it's been very busy here.
Yeah, we've obviously come out about the hot reporting season. The market started to cool off a little bit and take a breather. We've noticed a lot of clients and high net worth and retail investors alike with some risk positive sort of demand for ECM deals, on market placements that offered discounts to last closes. And obviously *inaudible* touching option is a big thing in this market. So a lot of people looking for bargains and a lot of people looking for some of those risks on ECM deals."
"Well, as we know, we’re racing into Christmas. Dare, I'll be the first person to mention Christmas here on Ausbiz. We can still expect cash yielding nothing for quite some time. So this activity really should spill into next year as well."
"Yeah, for sure. And I think that the overall market at the moment is seeing jitters because inflation expectations are rising. I think in the US, It's risen the 10th month in a row. So we're seeing a sell-off in some of the more overpriced tech sector companies, a lot of money rotating out of some of those growth names and, moving into some pretty healthy, discounted Pre-IPO placements, which we have currently actually noticed quite a pickup with some of our businesses listing on overseas exchanges.
One in the renewable energy space and like you mentioned before, one in the resources space; iron ore."
"So what's ticking along there in the iron ore space? I mean, it's a little on the nose when it was yielding $230. Is it still a good outlook?"
"Look, I think so. Obviously, the China thematic is on everyone's lips at the moment. Iron ore was settling down to I think 123 overnight. We expect it to probably find a bit of comfort around the 130 level. We were earlier expecting around $150US per ton, but with the current jitters in commodity pricing, geopolitical tensions, obviously in the iron ore price, but we’re comfortable to accumulate on weakness as we always have.
Some of your larger miners like BHP, RIO, Fortescue are extremely profitable even with iron ore prices coming off. More so, in the ECM space, our own, Koch Metals, which is looking to waste on the London stock exchange, I think there's some big upside for investors. They're considering that they're moving towards a near term production target as opposed to being an explorer.
So, I think there's plenty of upside for some of the junior and mid-tier minors, and more than comfortable holding some larger iron ore companies like BHP, RIO, Fortescue, given the staples for their portfolio."
"So as you said, there's a lot of cashed-up high net worth, for example. Are they looking at resources or they're just looking for anywhere where there's a decent return on a two to three-year basis?"
"I think it depends on the sector. Resources have been hot throughout the year. It's probably tapered off a little bit towards the third, fourth quarter of this year though we're still seeing quite a bit of demand there.
Renewable energy is probably the biggest that we're seeing some sustained, demand from investors, a considerable amount, actually. I suppose the burning question for each investor is will Australia become a global superpower in the export of renewable energy?
I mean, we obviously think so. We face such a high demand from our clients in the renewable energy space. So we've had to concentrate a lot of resources, both internally, externally on providing our on client upcoming client webinars, meetings with board members in particular and, obviously keeping the overall market abreast with what we're doing in that space. It just seems to be a very hot topic at the moment.
We've got a couple of which we put away this year; Verdant Earth Technologies, which we'll be listing on the NASDAQ. And a current one with Sweetman Renewables at the moment, which we're going to sell out very soon, but still a very hefty amount of demand, particularly in those sectors."
"What about right at the very beginning, the seed capital stage, how is that going? "
"Understandably, no one knows what's going to happen over the next sort of six to 12 months in the market. And I think that's why you're getting such a rush for companies to list prior to the end of this year because they know that they're listing in a hot market, here's an exit strategy there, there's liquidity provided for investors if they do want to sort of, free up their investment and turn to cash prior to Christmas.
I think, more so, a lot of the early-stage investment opportunities, as your seed opportunities, I've seen a lot of demand taper off on a ground-level here at the company. We haven’t aimed to take on much more in terms of pre IPO. Definitely not taking any seed investment opportunities at the moment or presenting those to clients. Mainly because, if the market does turn next year, well, they go to the exit strategy. They go through a liquidity event for investors looking to get out, and it could be a long term hold.
I think that the market realistically should cool off. There should be a little bit of repricing in some sectors. So we're just taking our time with the companies that we currently have at the moment, making sure that we're dotting our i’s, crossing our t’s, getting these guys to listing this year in a hot market.
Beyond that, probably a conversation for another day, early next year we'll have an idea of where the market's setting. But at this point, we're just taking the ball and running with the current market that we have. We're doing well while we're doing it. And fortunately, that translates to return for investors. So, we couldn't be happier. It's going to be a good Christmas for a lot of our investors, and a lot of us say we're quite fortunate."
"Yeah. Well, good to hear it. We'd like to hear people making money investors as well as yourselves. Thank you so much Trent for popping in, cheers."
"Thank you for having me."
This interview was arranged by Hans Lee, producer and journalist at ausbiz.
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