Patersons Securities has retained top spot in WA Business News’ annual survey of capital raisings, followed by Hartleys, Euroz Securities and Macquarie Capital Advisers.
Patersons Securities has retained top spot in WA Business News’ annual survey of capital raisings, followed by Hartleys, Euroz Securities and Macquarie Capital Advisers.
“IT was a most interesting year with the markets experiencing all the seasons: a positive start, a very tough mid-year and a strong finish.”
That was how Patersons Securities chairman Michael Manford described 2010, a year in which his firm raised just over $800 million for its Australian clients.
Hartleys head of corporate finance Grey Egerton-Warburton agreed.
“The longer the year went, the stronger it was,” Mr Egerton-Warburton told WA Business News last month.
“Right up to Christmas it has been very strong. Hartleys has completed four capital raisings this week, which is unusual for this time of year.”
Euroz Securities executive director corporate finance Doug Young observed a similar pattern.
“More speculative money and confidence returned to the small and mid caps, where WA companies predominate, in the last four months of the calendar year on the back of stronger commodity prices,” he said.
The bullish finish to 2010 contrasted with the fluky conditions a year earlier, when two major share market floats were canned.
Talison Lithium scrapped its $196 million IPO in December 2009 and Q Copper’s $165 million IPO was cancelled in February 2010.
The strong finish to 2010 also shows how much the market has recovered from the impact of the proposed resources super profits tax, which Mr Manford described as a “drive-by shooting that halved equities volumes”.
“These uncertainties fed into retail investors, who remain very cautious and are seeking to restore balance sheets as they relate to debt and property and reducing their equities volumes,” Mr Manford said.
He said the number of IPOs late in 2010 demonstrated the recovery in the market and the unique nature of the WA capital markets on a global basis.
Against this backdrop, Patersons continued to be the busiest broker in Perth, taking a lead role in 161 capital raisings last year, including many very small transactions.
Patersons’ clients raised a total of $1.04 billion in these transactions. After adjusting for the contribution of joint lead managers and joint underwriters, the amount actually raised by, or attributed to, Patersons was $807 million.
Patersons’ biggest transaction was a $103 million capital raising for mining contractor Ausdrill. This was jointly managed by Patersons and Argonaut, and was therefore split 50:50 between the two firms.
The process of constructing league tables is always contentious, especially where it can change the ranking of various broking firms.
The 50:50 attribution sometimes understates the amount of capital actually raised by some firms; in fact, nearly every broking firm claims they raised more than 50 per cent of the funds when they were joint lead manager. Ultimately, though, it avoids the double counting that often distorts league tables.
It also reflects the contractual relationship between joint lead managers, which may bid for differing amounts of stock but are partners in the transaction.
Hartleys moved up to second place on the league table, after raising $521 million for its clients.
Its total was substantially helped by its appointment as joint lead manager (with UBS) of Riversdale Mining’s $337 million placement and entitlement issue.
Other key transactions for Hartleys were Atlas Iron’s $63 million placement and MACA’s $60 million IPO.
Euroz Securities raised $508 million for its clients, including as lead manager of three capital raisings for Aurora Oil & Gas, and joint lead manager for two capital raisings for Northern Iron.
Euroz also contributed to a $164 million capital raising for nickel miner Independence Group.
However, its contribution to that raising was not included in the league table because Euroz was appointed as “co-manager”.
The Independence Group raising was attributed in full to Bell Potter, which was appointed as ‘sole lead manager’ and sole underwriter of the capital raising.
The same filtering process was applied to numerous other transactions, primarily to avoid double counting and to focus credit on the lead managers, which typically earn the bulk of the fees.
For instance, Sandfire Resources’ $103 million capital raising was attributed in full to ‘lead manager’ Goldman Sachs, even though Macquarie Capital Advisers and Bell Potter contributed in their capacity as ‘co-lead managers’.
Similarly, Mungana Goldmines’ $76 million IPO was attributed in full to ‘sole lead manager’ Southern Cross Equities, even though Macquarie Private Wealth contributed in its capacity as broker to the IPO.
Macquarie Capital Advisers was fourth on the league table, with capital raisings worth $490 million.
Its major transactions included capital raisings for Brazil-focused miner Mirabela Nickel, local nickel miner Western Areas and Norway-focused Northern Iron.
Macquarie’s data also includes transactions for Darwin IT company CSG, because those transactions were managed by Macquarie’s Perth office.
UBS, which does not have a broking presence in Perth, was fifth on the league table with capital raisings worth $372 million.
Goldman Sachs, Southern Cross, BBY and Shaw Stockbroking were other firms that featured even though they do not have a broking presence in Perth.
Among Perth-based brokers and advisers, Argonaut raised $197 million for clients including Ausdrill, Aspire Mining and Matrix Composites & Engineering.
It also contributed $45 million to Mirabela Nickel’s $180 million raising, but this was not included in the league table because Argonaut was one of two ‘co-managers’.
Azure Capital and CPS Securities both raised more than $100 million, including teaming up on very successful IPOs for Hunnu Coal and Haranga Resources.
One of the emerging themes last year was the growing number of transactions jointly managed by Australian and overseas brokers.
Aurora Oil & Gas, for instance, raised $120 million in a placement last month. Euroz acted as lead manager and underwriter for $60 million of the offering, with Canada’s TD Securities and GMP Securities underwriting the balance.
Similarly, Rialto Energy recently raised $55 million, with RBC Capital Markets acting as global lead manager, Euroz acting as joint lead manager and GMP Securities as co-manager.
An increasing number of Perth companies are listing on multiple markets to help them tap international investors.
Mirabela Nickel, for instance, is listed on the Australian and Toronto stock exchanges, and for its last capital raising used Macquarie, UBS, GMP, Argonaut and Haywood Securities as lead or co managers to the global offer.
Macquarie’s Craig Carter said cross-border deals, principally between Australia, Canada, Hong Kong and Johannesburg, would continue to become more significant.
“Our advice to Australian clients is to remain agnostic as to what global market best suits their needs,” he said.
Mr Carter said Canadian institutions had traditionally been more supportive of early stage exploration plays and projects in exotic locations.
“As time has progressed, many of these regions are no longer regarded as exotic, such as West Africa, and so we have been seeing Australian and Asian funds come onto registers and participate more freely,” he said.
Max Capital’s Tony King saw the market evolve differently.
“We saw a willingness of major overseas funds to come down the curve in value in order to get exposure to sectors such as West African gold,” Mr King said.
Azure Capital director Geoff Rasmussen said there had been a significant increase in interest in Hong Kong listings, with several ASX companies now actively working on HK listings and raisings.
He said Hong Kong may emerge as a real competitor to the TSX for dual-listing ASX companies.
“However, at the moment, it is nowhere near as ‘mining friendly’ as TSX and the costs associated with a HK listing are still very onerous,” Mr Rassmussen said.
Galaxy Resources will be one of the first Australian companies to list on the HK exchange, after gaining shareholder approval last month.
“Galaxy’s compelling ‘China story’, encompassing the downstream lithium carbonate plant in Jiangsu coupled with the Mt Cattlin resource, is well understood by investors in Hong Kong,” managing director Iggy Tan said.
Mr Rasmussen said interest in dual listing on London’s AIM market continued to be low “and indeed there has been interest by AIM listed companies in securing a dual listing in Australia”.
A case in point is GGG Resources plc, which is seeking a listing on the ASX in tandem with a $6 million IPO for Australia investors.