New Issues Examined by Oliver Haill

Fourteen new companies pitched up in February, raising a total of £550 million – which means £696 million has been raised on AIM in the first two months of 2007, almost double the £390 million raised in the first two months of last year. However, in March and April 2006 the junior market pulled in a huge £2.6 billion, marking the beginning of a watershed year.

A total of 53 new companies arrived in March last year; at the time of writing only seven have dared enter since 1 March 2007, with another nine in the pipeline. Volatile markets at the turn of the month have meant that many aspirants have postponed their grand entrance, with others lowering their fundraising sights.

Offshore sustainable forestry investor Cambium Global Timberland had hoped to lumber onto AIM with a massive £250 million float, but in the end had to hack its expectations down to a more manageable £104.4 million. Nevertheless, the environmental bent of this Jersey-based fund kindled interest from institutional investors such as AXA Framlington and Artemis, as well as the company’s house broker Teather & Greenwood. Cambium’s management says the strategy will be to invest in forests in North and South America as well as the Asia Pacific region, ‘which are or can be managed on an environmentally and socially sustainable basis’. The company also hopes to increase returns by selling carbon credits based on the forests’ environmental value.

Venturing forth

Headed by former Beeson Gregory corporate financier Nick Rodgers, Ipso Ventures stalled its float for a week or so; but it eventually arrived on AIM having raised £4.5 million of new money. Rodgers – who, as a stockbroker, advised university commercialisation specialist IP Group – plans to build a similar business with Ipso, harvesting the fruits of university research by establishing spin-out companies or licensing agreements. An agreement struck with Loughborough is presumably the first of several. Broker Ambrian raised the money at 85p, and the shares have risen to 90p so far.

Californian counter Vycon, which designs ingenious renewable energy storage systems based on a technology used in steam engines and potter’s wheels, put off its float even longer. The company, where former National Grid finance director John Uttley is chairman, completed its £9.2 million IPO four months later than the November date originally planned. Despite the slow play, those who bought in to Smith & Williamson’s placing – priced at 89p – were swiftly rewarded with a princely 23 per cent share price rise to 110p.

Broca could be big

AIM-listed 2ergo has finally demerged the exciting prospect that is its mobile commerce arm, under the new name of Broca. The new company – named after French scientist Paul Broca, who identified the area in the frontal lobes of the brain responsible for generating speech – was spun out at 52p for a value of just under £20 million and has already proved popular, with the shares sparking up to 86p.

Investors are lapping up management’s stories that Broca’s technology could turn mobile phones into secure ‘mobile chip and pin devices’, enabling true ‘m-commerce’. The technology, which can be downloaded onto mobile phones, enables users to send and receive encrypted information. Possible applications have been identified in the banking, gambling, ticketing and market research areas – as well as that of the big money-spinner, pornography. Managing director Ian Price says the business has been ‘experiencing a strong level of enquiries’ from a variety of sources.

2ergo’s founders Barry Sharples and Neale Graham have invested pocketfuls from their own bank accounts, and now each owns an 18.8 per cent stake. In a market segment expected to triple within two years, Broca could be big – but as it is still pre-revenue, it is certainly a gamble.