The global flow of capital is an essential part of business in an interconnected world.
And just as billions of dollars have been invested in Western Australia from overseas, Perth businesses provide capital for ideas and developments in other countries.
Money flows from listed Perth companies pursuing projects in other jurisdictions and foreign companies choosing to base themselves in the west.
According to research by Business News, 23 of the 53 companies that listed on the ASX since January 1 have registered offices in Perth.
Several mining companies with foreign operations have recently listed on the ASX, including Lithium Energy, which has operations in Argentina and Queensland, and Genmin, with projects in Africa.
Similarly, some foreign companies have chosen to locate registered offices in Perth in recent years, including US-headquartered Avita Medical, and Roots Sustainable Agricultural Technologies from Israel.
RM Capital head of corporate finance Nathan Barbarich has helped several Israeli companies list on the ASX over the years.
Mr Barbarich said companies often wanted to list from Perth to expand their products or services to Australia or South-East Asia.
“Perth is in the same time zone as most of those major South-East Asian locations,” Mr Barbarich told Business News.
“Sydney and Melbourne are close, but it’s even more logical to be here than Sydney or Melbourne.”
The shorter travel time to capital cities including Hong Kong and Singapore was also a positive of listing from Perth, he said.
In other cases, Mr Barbarich said he sought out foreign companies he believed had potential to list on the ASX and make their headquarters in Perth.
Companies in particular industries, including mining, were also more likely to list and base themselves in Perth because of the state’s rich resources reserves.
“If you are a mining company, you would probably have an office in Perth,” Mr Barbarich said.
“Chances are, it’s more likely to be near your operations.”
Azure Capital partner David Flynn recently helped engineering business DRA Global lodge its prospectus.
The group was a private business based in South Africa but wanted to list on the ASX and move closer to its customers in the mining industry.
“They are an engineering mining services firm, and Perth is like the Silicon Valley of resources,” Mr Flynn told Business News.
“A lot of asset owners have headquarters in Perth and management teams sit in Perth, but the assets might be in Africa or the US or Asia.
“For them, it operationally made more sense to be headquartered here.”
Mr Flynn said investors in Perth knew how the mining industry worked.
“I think there is an investor base in Perth that understands mining, so that’s helpful, but it’s not necessarily large-scale institutional money like you have on the east coast,” he said.
Skills from the mining sector also made basing a company in Perth more appealing, Mr Flynn said.
“There’s the human capital that’s here, people with experience in resources,” Mr Flynn said.
“There’s people with the talent and skillset that they need here so it’s an easier pool to employ from.”
Among companies seeking the broadest input of capital is WA-based Kincora Copper.
In a letter to investors in March 2021, chairman Cameron Rae said the company had a dual listing, on the ASX and the Toronto Stock Exchange, to seek access to local investors who were interested in funding local exploration and mining projects.
Another company with a presence in Canada is Uranium explorer 92 Energy, which is working in the Athabasca Basin in the north of Saskatchewan and Alberta, and listed on the ASX earlier this year with a $5 million initial public offering.
Chief executive Siobhan Lancaster said 92 Energy listed in Perth because it was the only company with exposure to the (Athabasca) basin on the exchange.
In addition, Perth’s experience with the uranium industry meant the city was home to knowledgeable people.
“One of the things with Australia is we are actually endowed with more uranium resources than anywhere else in the world, so that means there are a lot of skills in geology, in managing companies, and this has been exported all around the world,” Ms Lancaster told Business News.
“Perth is a great mining jurisdiction and has some great mining skills and some great exploration skills.
“Because of those skills and those skillsets, it seems appropriate that we apply those to other places around the world.”
Perth’s experience in mining, especially among juniors, is also attractive to other sectors.
RM Capital’s Mr Barbarich said foreign technology companies wanted to move in during the mining bust because investors in Australia were used to investing in riskier projects.
“Spending a million bucks to dig a hole and see if there’s something at the bottom of it is not dissimilar risk profile to developing some sort of technology that may or may not work or may or may not be adopted,” he said.
“They are higher risk sort of stuff.
“Australian investors generally are more willing to take those risks and invest in those sorts of companies when you compare that to, say, Singapore, for example.”
RM Capital is in the process of assisting Israeli technology company Gefen Technologies to list on the ASX.
Mr Barbarich said Perth also provided the right environment and regulation for medicinal cannabis companies.
“I think going somewhere where you are more likely to have supportive legislation to sell your product or conduct your research or whatever is a factor, so that’s why we are seeing companies like that locate here,” he said.
Zelira Therapeutics managing director Richard Hopkins told Business News in December that many of the first medicinal cannabis companies were established in Perth because of the state’s experience providing capital to the mining sector and because of Australia’s regulations around clinical testing.
“It’s not rocket science to step off from this risk capital from mining into cannabis as it began to emerge,” Mr Hopkins said at the time.
“The early movers, a lot of their capital came out of WA, so we were the first to build companies, to cultivate cannabis, to do clinical trials, to build clinics, to house them with doctors prepared to prescribe medicinal cannabis.”
Zelira Therapetuics was launched when Australia-based Zelda merged with US company Ilera Therapeutics in 2019.
The arrangement allows the company to conduct clinical trials in Australia and sell its products in the US.
MGC Pharmaceuticals is also based here but its operations are in Europe, after it was offered a backdoor takeover of Erin Resources in 2015.
Read the Promoting Perth E-edition here.
30 Jun 2021
