New Issues Examined by Oliver Haill

The AIM IPO scene appears to be rather blurred at present, with as many companies joining the market as shelving floats at the last minute

New UK bank Walton & Co may have ditched its £200 million AIM float plans, following a lukewarm City reception, yet the junior market still welcomed five new companies in February, together raising a modest total of £14.3 million.

Oil strike?
One of these, Kea Petroleum, was the first new issue from the oil and gas industry for over a year, following a complete absence of IPO additions in 2009 to one of AIM’s historically most active sectors. It was joined on AIM by Grampian gold explorer Scotgold Resources later in the month.

Brought to market by Australian entrepreneur Ian Gowrie-Smith, who has re-formed the team who built and sold AIM-listed Rift Oil for a princely sum, Kea has raised £6 million, adding to some £9 million already in the bank, and hopes to profit from its three exploration permits just off New Zealand. The company has also struck a deal whereby Canada-based Methanex Corporation will fund one of the wells in exchange for off-take and profit-share agreements.

Placed at 8p, shares in Kea, named after the green parrots indigenous to the South Island, which apparently enjoy flying to mountainous heights, have fluttered higher to 8.88p in their opening weeks of dealings. So long as news flow is positive, there is no reason why the shares cannot fly higher.

Kea’s non-executive director John Bentley – chairman of AIM-listed CDS Oil & Gas as well as Faroe Petroleum – also chairs Australian-registered newcomer Scotgold Resources (see page 30), which has raised a modest £700,000 on AIM, whilst opting for this dual listing in order to improve liquidity and ‘facilitate new opportunities in fundraising’.

Scotgold’s intention is to bring the Cononish gold and silver deposit in the Grampian region of Scotland into production by the end of 2011, as well as acquiring other prospects. Its shares have already jumped 41 per cent from the 4.6p at which the funds were raised to 6.5p. Highly speculative.

Bravo’s sweeter pill
Chemist Marcelo Bravo is another entrepreneurial character to have returned to AIM for more bites at the cherry.

Known to market followers after leading the 2006 spin-out of Oxford Advanced Surfaces from Oxford University onto the junior market, Bravo stepped down last October in order to develop other projects. He returns with one such new idea in the form of Oxford NutraScience, a developer of ‘delivery systems’ to make medicines and vitamin pills less bitter on the tongue.

Managing to drum up £1.1 million of new money for Oxford NutraScience, Bravo believes chewy confectionary-style pills will appeal to children and improve the attraction of larger vitamin supplements.

He has already launched Ellactiva, a chewy calcium supplement, onto shelves in the UK and Middle East and sees great potential in the group’s chewable tablets, ‘Chewitabs’. These ‘form a soft chew that dissolves quickly in the mouth and therefore can be taken without water’ and are suited for an apparently more convenient delivery of medicines such as analgesics, allergy treatments, digestive aids and medicines for the elderly.

Shares in Oxford Advanced Surfaces have proved a volatile ride, though Oxford NutraScience has received a warm welcome, with its shares swiftly surging more than 90 per cent higher to 3.38p. For optimists only.

Palms down
As well as an emigration from the full list for the heavily restructured engineering consultant WYG, chaired by well-regarded troubleshooter Mike McTighe of Volex and PACE renown, the last of February’s arrivals was West Africa-focused Equatorial Palm Oil. Shore Capital placed £6.5 million of shares in the newly formed venture, which aims to be a ‘sustainable’ producer of the commodity for cooking rather than use as biofuel. The shares slipped from their 17.5p float price to 15.25p in first day’s dealings and could prove volatile.