New IPOs This Week: Energy Green Transition / Helix Exploration
While the debate over the forthcoming death of the London stock market continues, so do the contradictory views on the subject. This week it was all gloom and doom from Peel Hunt. But it would appear that Cavendish, born out of FinnCap and Cenkos was rather more upbeat. Who to believe?
I think the answer actually comes from the stock market itself. This week we shall see two high profile IPOs from Energy Green Transition (EGT) and Helix Exploration (HEX). EGT is the latest from Cathal Friel, of hVIVO (HVO) and Poolbeg (POLB) fame, while HEX is headed by David Minchin, best known for Helium One (HE1). Both have a strong following in the market, and hence both have been able to raise the cash to list a company on the stock market. One would expect the same to happen for the First Development (FDR) IPO given the way that it is another spinoff from Power Metal (POW). And of course, we are looking at POW listing Power Arabia.
The 80/20 Rule is one that many of us may be familiar with. It is that most of the positive outcomes derive from just a few people. On the stock market I might suggest that the ratio is nearer to 95/5, with the rest complaining, standing aside, or just waiting for someone else to create the value. For instance, HEX was looking for £7m, and in the end scaled back investors from more than three times that amount, in what is supposed to be a bear market. Clearly, those involved with the company know what they are doing, and the teamwork required delivered the goods. The same delivery has obviously worked for Friel again and again too.
In the area that I am particularly familiar with, the PR/IR area, it is amazing to see how so many CEO’s go for the 80% of “offerings” from what could be described as cowboys and used car salesman, rather than working with those of a professional background who might stand more chance of moving the dial for their company and their shareholders. CEOs by definition tend to have a specific sector knowledge and cannot be expected to sort out the wheat from the chaff in the communications space. Hopefully, this state of affairs will eventually change. I may have intervene myself…
As far as the highlights were concerned over the past week, the latest from East Star (EST) was very encouraging. The Kazakhstan focused copper exploration and resource development company said it has initiated a formal process including the opening of a data room for a potential joint venture, farm-out, or sale of the Verkhuba Copper Deposit. This sounded like something of a feeding frenzy, given that several parties are said to be knocking at the door. But the big win here is that we finally have an exploration company doing what investors want: finding an asset, proving it up, and then selling it on. Liquidity events are the holy grail in current stock market conditions, and the idea that Verkhuba could on its own be worth more than the sum of part of EST is a real encouragement to all.
It was also interesting that Cadence (KDNC) took advantage of the recent recovery in the share price to raise fresh funds. The £500,000 was raised from a single institutional shareholder, with the idea being that the funds will solely be used to fund Cadence’s investment in the Amapá Iron Ore Project in Brazil, of which it has recently raised its stake to 34%. The Amapá project is set to have a 67% iron ore product flow sheet and produce 5.5 million tonnes per annum.
Also raising funds, in a good way, was anti-ageing group Genflow Biosciences (GENF). Here the company said it was looking to broaden its shareholder base, and did so by adding Premier Mition to the register. In total it raised just over £700,000. Together with the grants the company gets, it is flush with cash and can ignore any sniping from those who may not have a clue the very serious life saving work the company is doing, or click bait grade red herrings from the past.
In terms of the rising stocks of the week, there was finally a big turnaround for Gelion (GLN) as it announced progress regarding its lithium-sulphur battery. Genedrive (GDR) was also a highlight with the shares rising even before its CYP2C19-ID test for genotype-guided clopidogrel treatment was given the thumbs up by the NHS. Several stocks also rose before anticipated good news this week – as if we were in a bull market – they included Westminster Group (WSG), Upland (UPL), and even Tungsten West (TUN).
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