New Issues Examined by Ben Jaglom

After the recent vigorous shake-out of AIM, the new issues pipeline appears to be replenishing and a trio of diverse new entrants has lately caught my eye.

Professional services firm Deloitte made headlines recently with research which argued that AIM would ‘bottom out’ this year, falling to a low of 1,200 companies before picking up in 2011.

I recently spoke with Deloitte’s Richard Thornhill, who told me that after the ‘big shake-out’ that has brought company numbers down from a 1,700 peak, an increase is now likely, since the market ‘has to turn at some point’.

Activity has certainly begun to pick up, with one controversial concern to have chanced its arm being Jersey-domiciled, Zimbabwe-focused fund Masawara, which raised $25 million (£15.5 million) through a float at 50p. In its admission document, Masawara states that it plans to ‘participate in the recovery of Zimbabwe’s economy’ by investing in undervalued sectors including telecommunications, real estate, agriculture and mining.

Zimbabwe’s recovery
Masawara, which argues the Zimbabwean government may ‘privatise a number of assets in the medium term’, is headed by ex-World Bank lawyer David Suratgar, who teaches a course entitled ‘Financing of Development Projects and Techniques for Privatization in Developing Countries’ at the University of Georgia. Another key board member is non-executive director and well-connected Zimbabwean businessman Shingai Mutasa, also executive chairman of investment company TA Holdings, in which Masawara has a 30 per cent stake.

Masawara is unlikely to be a favourite with ethical investors, but the company’s suggestion that the Zimbabwean government is looking to lease out state land and agricultural estates to private companies offers the possibility of attractive returns. As such, the shares, which have put on 6.25p or 12.5 per cent to 56.25p since float, represent an interesting speculation.

NBNK nets £50m
Another major addition to AIM in August was NBNK Investments, which managed to attract £50 million at £1 and has seen its shares spark up to 116p in the days since debut dealings.

NBNK’s brief is to build a new UK retail banking group through acquisition, no doubt employing the contacts of its well-connected board, of which four individuals are members of the House of Lords. These include chairman Lord Levene, who chairs insurance market Lloyd’s, as well as directors Lord Brennan of Bibury and Lord Forsyth of Drumlean.

The two non-lords on the board are Sir David Walker, former chairman of Morgan Stanley and formerly an executive director at the Bank of England, and Charles McCreevy, once an Irish cabinet member and the former European commissioner for the internal market.

NBNK plans to ‘establish a network of 400 to 600 branches across the UK’ and will be advocating a ‘return to a traditional branch-based, personalised local service, alongside a modern banking operation with internet and telephone banking services’.

Plotting profits in a recovering banking sector in need of new competition and with a distinguished board overseeing developments, shares in NBNK could prove a good long-term investment.

A more recent debutante is Chinese ceramic tile distributor and seller Asia Ceramics, which raised £1.2 million privately and pulled in a £500,000 loan from chief executive officer Dr Dingxin Pu ahead of September AIM dealings.

Foshan-headquartered Asia Ceramics plans to use AIM to help it create a chain of franchise outlets within the next two years, having already opened stores in Foshan, Guangdong province and Hong Kong.

Asia Ceramics is one of several niche businesses looking to cater for the growing Chinese market. Its shares, which kick-started AIM trading at 66p and have jumped to 82.5p, should have further to go.