Companies: ARL    LONG    PAHC    PANC   

Three new adherents to the PLUS-quoted system – gold miner Ascot and internationally focused investment companies Hellenic Capital and Geo Genesis – raised a modest total of £260,000. However, the two companies ‘taking AIM’ in April managed to prise more than £26 million from investors between them.

Phibro finds sizeable funding
They included the sizeable bulk of New Jersey-based Phibro Animal Health. Capitalised at $360 million (£182 million), it is the third-largest company to float on AIM this year.

With broker and nomad Panmure running the book, $45 million was extracted from institutional investors, of which London-listed 3i Quoted Private Equity was the main subscriber. 3i, which invested $53 million pre-IPO, took its stake up from 19.5 to 29.9 per cent in the placing.

Although Phibro has steadily grown sales over the past three years, the company has remained mired in losses. These reduced from $7.9 million to $6.3 million pre-tax in 2007, while it had significant long-term debt of $249 million at the end of the year.
However, the company plans to keep producing healthy rates of organic growth through the sale of animal health and nutrition products worldwide into the poultry, swine and cattle markets. With its finances strengthened, it plans acquisitions.

Investment group Longships, a ‘clean’ cash shell with a gross £3 million of new cash raised at float, was the other AIM newcomer and is worth keeping an eye on due to its management team. Chairman Craig Niven and investment director Charles Cannon-Brookes bring their experience as investment directors at their current employer, AIM asset manager Arlington (which is a 17 per cent shareholder in this new company), to the business and are currently looking for a suitable venture to reverse into the company.

Two-storey empire
March AIM debutant Panceltica meanwhile raked in $115 million (£58 million) of pre-float cash to give it a debut market valuation of £248 million. This is the largest float on AIM so far this year and takes the average size of new companies on AIM in 2008 to £57.2 million – below the £64 million from last year’s entrants but above the current
£53 million mean average size of an AIM company.

Newcastle-born former carpenter Paul Fraser, chief executive, plans to assemble a sizeable construction empire in the Middle East based on some nifty new technology he picked up in New Zealand. And he says the company is already finding plenty of demand in all shapes and sizes – ‘We’ve built offices, schools, houses, even mosques!’ – although the group’s technology can only create steel frames for up to two storeys.

But a competitive advantage comes from the speed at which buildings can be built thanks to Panceltica’s proprietary technology, which allows builders to order rolls of galvanised steel and process it into the steel frames on the building site itself. This, says Fraser, makes the process a lot quicker: ‘In the UK, a 100,000 square metre house would take six months to build: we did a project of the same size in 21 days! It’s a good option for disaster areas.’

But he stresses that the costs and margins remain the same as an ordinary building process: ‘We get 20 per cent margins, but it’s quicker and a better standard. Four years ago, I saw the shortage of skills and building materials in the Middle East region and saw a niche. We supply a CD that has all the instructions on, so the skill levels are able to be much lower.’

Fraser and his business partner bought the rights to the process in November, following this up with news that the company made profits of $19.8 million for the year to December, after signing a sizeable deal with government-backed companies in Qatar. ‘The Gulf has a huge need but connections are crucial,’ waxes Fraser, adding that his own relationships in the region were formed back in the 1970s. And with plenty of cash swilling around this oil-buoyed region, I think Panceltica could go on to build a sizeable following.