EVERY industry has its holy grail, a breakthrough technology that is said to be cheaper, faster and better. Over the next few weeks a new company that claims to meet all of those requirements will be seeking a minimum of $2.4 million via a public float and listing on the stock exchange.
ShieldLiner Ltd, which has been quietly developing its revolutionary pipe re-lining system for the past five years, is going to the market with an impressive list of backers – and a few residual question marks.
Top of the list on the plus side of the equation is the backing of one of WA’s biggest underground pipe owners, Alinta. The gas company has been an investor in ShieldLiner for several years and will participate in the float to retain a stake of approximately 10 per cent. To do that Alinta’s chief executive, Bob Browning, will need to right out a cheque for $240,000.
It is Alinta’s cash, hard-earned dollars from flogging gas, and the likely appointment of an Alinta-linked director that gives ShieldLiner that Colgate gleam of confidence which might otherwise be lacking.
Briefcase, which can never stress enough that it does not give investment advice (either way), was not an early believer in the company, or its claimed technical breakthrough. First point on the "Doubting Thomas" scorecard was the question of why has a Perth company been able to do what others have not? Second, was the apparent simplicity of what ShieldLiner does (relines old pipes) and third was the leading role of the Graham family which was last in the headlines when it played the leading role in the ill-fated Eagle Aircraft float.
ShieldLiner chief executive and former PriceWaterhouseCoopers accountant John Hassen acknowledges that the Eagle Aircraft troubles had caused him some difficulties when explaining ShieldLiner to Perth stockbrokers. However, he adds the family will not be represented on the board of the new float.
Having made that point, Hassen is full of praise for the invention itself, which is a product of Graham family ingenuity and received a glowing write-up in WA Business News last July.
"They have come up with a device which answers a lot of pipeline repair questions," he said. "What we now have is a system which lines, seals, repairs and reinforces pipes in one process without major trenching required."
The essential working aspect of this trenchless system is a "multiple chambered tool" which requires just two entry points into a leaky, or damaged pipeline which might be carrying gas, water or some other fluid. At one entry point a package of liner material (fibreglass and other components) is introduced and then inverted using air pressure. At the other point a pumping system injects grout or cement to the cracks in the host pipe and resin to the liner material. The result is a pipeline, which, in some cases is said to be better than new.
Hassen says the ShieldLiner has the capacity to repair both big and small pipes, and is suitable for gravity and pressure pipes. An important test of the system, which involves another big WA pipeline operator, is scheduled for later in the year when the WA Water Corporation makes available a section of pipe in its country system for a ShieldLiner trial.
"Having a reference site like a WA Water Corporation pipeline is important to us because it enables us to demonstrate the technical efficiency and the ease with which it works," he said. "It really is so beautifully simple that even a chartered accountant can understand the process."
For investors, the key is not so much whether the ShieldLiner system works as to whether they will be able to make a profit from it. This is a classic case of technology risk. From Hassen’s perspective he is confident that not only will it work but it will be a spectacularly successful technology because it has the potential to be massively cheaper than conventional pipeline repairs. Quite simply, it is the difference between digging up kilometres of pipe versus pumping in a flexible liner and grout.
"Every job will be different but we’re confident that we will be able to de-liver a system which works at 60 per cent of the existing cost of repairing a damaged pipe," Hassen said.
n n n
JUST for a bit of comic relief, Briefcase has been wondering what the recent expansion of the European Union means for business down this way. The May 1 advent of new members of the European family means that Europe is now much bigger than North America as a potential market, and possibly more attractive than China because of its strict adherence to commer-cial laws and property rights. That’s the plus side of the issue.
The other side is that there are still an awful lot of people who do not believe that the great experiment in creating a unified Europe will work and, it was while chatting to a Welsh friend in a small bar that an example of the future problem was spelled out in marvelous simplicity.
This story, set in north Wales, was told at a time when celebrations were reverberating around Europe – and the first trickle of cheap labor from the new member States (some of which are seriously impoverished) started to arrive in Germany, France and Britain.
This new Welsh friend of Briefcase told how he was attending a sales meeting of his company, which has branches across Europe.
"Everyone was so excited that it was hard to not join in the fun," he said. "But, as the night wore on I remembered growing up in a coalmining valley."
"I then told how my village of about 2,500 people was on one side of the valley and there was another village of about 2,000 people on the other. And, you know what, we hated the people over there, we really hated them."
From the mouths of babes. In a nutshell. Call it what you like. This is a story from one valley, in the same country. How can you then believe that a few thousand years of hatred between Germans and Poles (as just one example) can be forgiven and forgotten by the signing of a few documents.