New Issues Examined by Oliver Haill

Investors happily splashed their cash during the festive season, with AIM investors stumping up £1.8 billion in December alone, almost a fifth of new monies raised during 2006. Nevertheless a downward trend was detectable, with the average amount raised per float in December being £32.2 million, down from November’s £35 million average.

This dropped further still in January to £13.4 million, with effete financiers only managing to prise £147 million from investors’ hands. This figure mostly reflected fundraisings for two offshore investment trusts: Loudwater, which raised £75 million to provide late-stage funding for companies seeking their own IPO and Camper & Nicholsons Marina Investments. It attracted £33 million for investment in the apparently flourishing marina sector. Both ventures have been warmly received, with Loudwater’s shares rising by 20 per cent and C&NMI’s by 3.5p to 69.5p.

Slow-burn appeal of biomass

Regular readers may have noticed my fondness for green-tinged stocks, and one of the more interesting January entrants to catch my eye was Helius Energy, AIM’s first biomass burner. Named after the Greek sun god whose chariot was pulled across the sky by four horses, the company was created to develop and then operate electricity generation plants run on biomass, which is derived from the inexpensive by-products of the timber, cereal and oil seed industries. Such energy should soon be in great demand as the Government’s 2006 Energy Review Report implied the UK is likely to need around 25 gigawatts of new electricity generating capacity by 2025, as coal, oil and nuclear power stations are replaced – equivalent to more than 30 per cent of today’s capacity.

The Renewables Obligation, the Government’s main mechanism for supporting renewable energy, has set a target for the proportion of renewable electricity supplied to rise from six or seven per cent for 2006/07 to 15.4 per cent by 2015.

John Seed, Chief executive of Helius and former member of the DTI’s Biofuel Advisory Panel, assures me that once construction starts in the fourth quarter of 2007, it will only be 18 to 24 months before the first plant in Humberside is up, running, and producing its annual 65 megawatts.

Seed has ‘£5 million of working capital’ to develop the first site and has options on another site and a number of other projects further down the pipeline in the UK, with others under consideration overseas. This first plant will save about a million tonnes of carbon emissions a year and, says Seed, ‘it is an EIS-qualified scheme, so it has benefits in terms of tax incentives’.

Placed by broker Daniel Stewart at 26p to raise £2 million, Helius has settled at 32.5p (valuing the company at £22.7 million) after an initial sharp rise. The shares seem a reasonable speculation on a long term view.

First signs of a thaw?

Two-thirds of the way into February and only nine new participants had joined the market, although significantly the average size of fundraisings had recovered to pre-New Year levels at a weighty £38.8 million.

For instance, asset manager Polar Capital, set up six years ago by former Henderson Global fund managers, has raced northwards from its 190p start price to 260p, and Valentine’s Day debutante Haike Chemical already seems loved, having surged by more than 80 per cent to 146.5p. If the former Chinese state enterprise can keep producing profits from its petrochemical and speciality chemical business, the shares shouldn’t break too many hearts.