New Issues Examined by Ben Jaglom

Following a quiet month for AIM in May, when the market enjoyed but one new issue, investors were treated to a diverse trio of new entrants in June

June’s new AIM entrants included a long-established black cab manufacturer, a cash shell with a brief to invest in Chinese hydropower and a Mozambique-based coal explorer.

One of the past month’s new arrivals was Mozambique-based Ncondezi Coal, which successfully joined AIM after hauling in the best part of US$52 million (£36 million) of new money, by way of a placing at 123p. Investors were attracted to the potential of the British Virgin Islands-registered coal exploration and development company’s four licences in Western Mozambique’s Tete province, as well as the calibre and connections of its board.
CEO Graham Mascall was formerly head of M&A, base metals and new business at industry behemoth BHP Billiton.

Another key board member is non-executive director and ex-Mozambican minister Estevao Pale, CEO of Mozambican natural gas company Companhia Mocambicana de Hidrocarbonetos and the national director of mines in the Ministry of Mineral Resources and Energy in Mozambique between 1996 and 2005.

Armed with its fresh haul of cash, Ncondezi plans to use the proceeds to push on with its exploration work in Mozambique, and by the end of 2014 it intends to produce some ten million tonnes of coal per year and to export to India’s fast-growing economy. AIM investors have responded positively to the Ncondezi story, chasing the shares north to 132.5p, at which they price the business at a shade under £158 million.

Lee looking for deals
Another British Virgin Islands-based business to have taken AIM, this time with a lesser £3 million funding, is cash shell Northwest Investment Group. The company is headed up by youthful chairman Kevin Lee, just 28 years old, who previously plied his trade as a researcher for state-owned Chinese Investment company CITIC.
Lee and his team are now looking for investment opportunities in the growing hydropower market in Western China, with the aim being to complete a reverse takeover deal within 12 months.

Reflecting the uncertainties of backing cash shells, the shares, issued at 25p, have since slipped back slightly to 22.5p, valuing Northwest Investment at £2.99 million. They represent a speculative bet on Lee’s ability to source a suitable deal.

AIM move for Manganese
Admittedly a Full List transfer, rather than a pure-play new issue, cab-maker Manganese Bronze moved to AIM last month after 70 years on the Main Market. Migrating to AIM with cost benefits in mind, Manganese not only builds the world-renowned London black cabs, it also sells a range of new and used black taxis and provides them with servicing and repairs.

Manganese has had a tough time of it during the recession, reporting losses of £7.2 million for 2009, following a £14 million deficit in 2008. The company, which has a joint venture in China called STLI Shanghai with car-building giant and shareholder Geely Automobile that sees black cabs and limousines sold in the city, will probably struggle for the next couple of years.

Nevertheless, its joint venture should thrive, since demand for cabs is strong in China, and the shares, having fallen from a 52-week high of 236p to a bombed-out low of 41p, offer speculative recovery possibilities.

Easydate attracted to AIM
By now, internet dating concern Easydate will have made its AIM debut, having flagged its intention to attract £10 million from investors at 60p, for a £45 million market cap.

The Edinburgh-based company was founded five years ago by CEO Bill Dobbie, 51, a tech entrepreneur who set up Teledata and sold it to Scottish Telecom.

Encouragingly, Easydate turned a £118,000 loss into £983,000 pre-tax profits on doubled turnover last year and will use the float funds to accelerate its acquisition programme, launch dating websites abroad and develop new ‘niche’ dating sites. Watch this space.