Market enables new listings

The stock market’s appetite for new listings is allowing a range of industrial, mining and technology companies to raise capital.

VEEM and Alinta Energy do not have a lot in common, with one a family owned engineering company and the other a major player in the national energy market.

What they have in common is a plan to list on the stock market, after careful evaluation of alternative ownership structures.

VEEM closed its $25 million initial public offering last week, after the share offer was substantially oversubscribed.

Alinta Energy will be hoping it gets a similar response when it sets out to raise an estimated $2 billion in its IPO later this year.

They will join a diverse array of Western Australia-focused companies to list on the ASX this year.

New listings in the September quarter included investor chat forum HotCopper Holdings, which raised $12.2 million, tech firm Pointerra, and explorer Egan Street Resources.

Maddington-based waste management business Aurigen Group, which is being advised by Azure Capital, is another WA company aiming to list.

It is reportedly aiming to raise up to $17 million through pre-IPO and IPO funding rounds this year.

Beyond that, an array of companies is pursuing raisings between $4 million and $5 million, either via IPOs or reverse takeovers (RTOs).

These include Zelda Therapeutics, Ausnet Real Estate Services and tech firms such as Cycliq, Metavone and K2fly.

These companies will be entering a market in which gold and lithium stocks have been among the few positives over the past year.

Multiple options

VEEM chairman Brad Miocevich said his family had explored multiple ownership options during the past decade.

“We were ready for an IPO before the GFC,” Mr Miocevich told Business News.

Fortunately the float did not proceed then, he said, as the business was now a lot more advanced in its pursuit of global markets for its specialist marine products, notably propellers and gyro stabilisers, which are designed to reduce roll in boats.

The family has also considered trade sales and private equity.

“We looked at it very carefully,” Mr Miocevich said. “Private equity requirements do not meet our family goals and our values.”

A major concern was the likely loss of control if a private equity investor took a big stake.

“It wasn’t about just getting the money, that would have come easily,” Mr Miocevich said.

“You don’t get to choose a lot of your destiny. In a public entity, collectively the shareholders get to decide.”

He said the family, including managing director Mark Miocevich, decided years ago they would not hand Veem to their children.

“We’re second generation, we’re not going to the third generation,” Mr Miocevich said.

“We decided that before we had children.”

Mr Miocevich believes family companies that transition to public markets perform much better.

“I think it’s because there is a greater degree of scrutiny and discipline that comes from the requirements of ASX listing and public money,” he said.

The family linked up with corporate adviser Pitcher Partners when it was exploring a backdoor listing, but decided that was not the best option.

“A backdoor listing is not the flavour we want,” Mr Miocevich told Business News.

Instead, it appointed Euroz Securities as lead manager for its IPO, which comes 48 years after Mr Miocevich’s father established the business.

For the past 30 years the business has developed unique niches in global markets.

“We have the world’s most advanced propeller manufacturing facility in Canning Vale,” Mr Miocevich said.

It has also developed gyro stabilisers for superyachts and commercial vessels, which Mr Miocevich said were superior to any competing product.

A high degree of automation and robotics has enabled the company to keep its manufacturing operations in WA.

“We have very good profit margins manufacturing in Australia, and we’re very proud of that,” Mr Miocevich said.

Most of the IPO proceeds will be paid to family members, with about $5 million retained for the company’s growth.

Mr Miocevich said the sell-down by family members would give them more financial independence and ensure there was a suitable free float to boost the stock’s liquidity.

He expects the family’s holding will be gradually diluted over coming years as Veem raises fresh capital to support new products or to make bolt-on acquisitions.

Private to public

Alinta Energy’s planned IPO will take the business back to the ASX, where it was listed in 2000 after the WA government privatised the old AlintaGas.

Its current private equity owners, led by US group TPG, pursued a trade sale this year before opting for an IPO.

Reflecting the scale of the planned IPO, it has appointed a panel of brokers, including joint global coordinators UBS, Goldman Sachs and Macquarie Capital, and joint lead managers Credit Suisse and Morgan Stanley.

Retailer brokers Bell Potter Securities, Morgans Financial, and Evans & Partners have also been appointed, with Alinta believed to evaluating the appointment of a fourth retail broker with a strong WA focus.

Broker performance

The VEEM IPO added to a strong lift in Euroz Securities’ performance.

Euroz was one of the most active brokers in the September quarter, according to deals recorded in the BNiQ Search Engine.

It was a lead manager on nine capital raising deals, for clients including Independence Group, Imdex, Australis Oil & Gas, and Troy Resources.

That was after a doubling in the value of its ECM dealings to $300 million in the year to June 2016.

Hartleys also had a busy quarter, working on 20 capital raisings, but mostly of a smaller size.

Hartleys’ performance was reflected in a strong lift in its financials in 2015-16, with revenue jumping to $52 million and net profit up to $10.6 million.

Patersons Securities did not fare as well, with revenue dropping to $69.1 million and its net loss increasing to $7.1 million after a major restructuring.

The BNiQ Search Engine has details of 220 corporate finance transactions during the September quarter, worth a combined $5.6 billion.

That’s similar in number to the June quarter (225 deals) and up strongly from the March quarter (116).

The largest completed deal was the sale of $1.35 billion of Keystart housing loans to Bendigo and Adelaide Bank.

That was a good deal for the state government’s key advisers – Gresham Partners and Herbert Smith Freehills.

Several major M&A deals, including Woodside’s acquisition of a project in Senegal and an interest in the Scarborough gas fields, did not have disclosed financial advisers.

Macquarie Capital continued to be one of the major corporate advisers in the WA market, despite losing several key executives over the past year.

Its clients included Emeco Holdings, Kingsgate Consolidated, and Independence Group.

Among the law firms, Ashurst and Gilbert + Tobin each worked on several major deals, while Steinepreis Paganin continued to dominate the smaller end of the market, working on 15 ECM deals announced in the quarter.