New Issues Examined by Oliver Haill

Raising funds even for established players in the recently crunched property and construction sectors is hard enough, so to find two newcomers from this space debuting on AIM proved something of a surprise.

Deals mount for newcomer
However, Mountfield, a specialist in the building of data centres for the likes of Cable & Wireless and BT, claims to have largely escaped troublesome market conditions by remaining focused on a buoyant niche. ‘The general market is poor,’ admits chief executive Graham Read, ‘but certain sectors are still active, such as data centres, where there’s an awful lot of work.’

Mountfield’s businesses, apart from a newly purchased land-parcelling arm, have traded profitably in fast-growing markets and the company made more than £2 million of ‘pro forma’ profit last year.

Planning to acquire complementary companies, Read, who says the company had settled on an AIM float a year ago before shelving its plans and buying a housebuilding arm in order to make the move this autumn, is confident of raising capital for further gains. ‘We’ve got two acquisitions in mind and we’re looking at established companies with a good bottom line, a good name and a good client list.’

Of more speculative appearance is Agua Terra, a newly formed property developer-operator focused on Greece and Cyprus. Led by European property investor Markos Kashiouris, the company is targeting this region due to its significant pricing advantage over the over-developed south-west Europe. Its aim is to develop and operate a number of sites, with a first, on the ‘cosmopolitan’ Greek island of Mykonos, bought for €8.3 million (£6.6 million) shortly after listing.

Although, as I understand it, management intend to reduce risk by funding all construction from pre-sales of appartments and ‘ring-fencing’ its debt, any operation like this is a high-risk. Potential investors might note that the company’s admission document contains a full eight pages of ‘Risk Factors’ (including a paragraph on corruption, which is ‘perceived as a problem in a number of countries in south-east Europe’), which tells you much about the nature of this particular beast.

Double-barrelled clean-tech
Although ostensibly no less speculative, as it has a resolutely lossmaking history (and a hearty four and a half pages of risk factors), Irish green energy company Kedco has been eagerly welcomed by the market in its first weeks of trading. Its shares have risen 48 per cent to a0.26 (21p) since joining on 10 October.

What has attracted investors is that Cork-based Kedco is poised to begin a number of joint ventures that kill two ecological birds with one stone, by using municipal waste to create ‘clean’ energy. Although broker Lewis Charles did not pull in any cash for the company at float, Kedco intends to raise between a10 million and a20 million next year to fund the first of 25 plants in its pipeline. Chief executive Donal Buckley says the first plant is likely to be in London with another outside the capital to follow.

Kedco, whose losses widened significantly to a5.4 million pre-tax in the fourteen months to last June, plans to partner with local companies, sourcing the most appropriate technology for their market via its ‘strong links’ with renewable energy companies, then setting up and helping run the plant.

Proposed technologies include gasification, a process by which biomass is treated with oxygen at high temperatures in order to produce a clean gas called syngas, that can be turned into synthetic fuel or burned for electricity or heat. With the EU landfill directive a key driver, Kedco could do well if projects get off the ground.