Greenkote, a young ‘eco-friendly’ Israeli coatings company targeting the motor and construction sectors, plans to raise £2 million at 25p to fund expansion.

Nabarro Wells will be broker and nominated adviser to Greenkote, which boasts a patented coating process, Summet’s Thermo-Chemical Surface Modification, which is claimed to give metals, alloys and powders increased resistance to low and high temperature corrosion, writes Robert Tyerman. The process, also said to improve wear resistance and bonding to rubber and plastic, finds a use chiefly in the motor, construction, aerospace and medical industries and Greenkote’s customers include Motorola, General Motors, VW supplier MAG and the Israeli Defence Force.

Chief executive Arie Laor argues ‘our process provides improved anti-corrosion properties at reduced costs… and offers up to 70 per cent cost reductions in the hard coatings market’. Greenkote has a link with TCB, a British tension control bolt supplier, and their joint product has won accreditation with several UK heavy construction projects, including the Oval cricket ground and Heathrow Terminal Five.

If successful, the float will put a value of £6.2 million on the company, which wants the £2 million sought to help fund the addition of a plant in Germany to its existing Israeli facility and another in Romania. Some of the money will go to repay a £250,000 bridging loan.

Built out of Summet, Greenkote was incorporated only in February, but Summet, which received nearly £70,000 funding over the past five years from the Israeli government, industrial foundations and private backers, lost £1,000 in the nine months to last September. Consultant Equity Growth Research bullishly sees Greenkote turning expected losses of £357,000 this year on £641,000 sales into £262,000 pre-tax profits on £2.5 million sales in 2006, surging to £1.1 million pre-tax in 2007 on sales of £5.4 million.

More details should be available soon.