Battery growth powers mining IPOs
Growing markets for minerals needed in battery manufacturing are powering a rise in small-cap mining company listings on the Australian share market this year.
Fifteen of the 57 companies listing on the ASX in the first six months of 2017 are miners, data from accounting and business advisory firm HLB Mann Judd shows.
The total number of new listings is well up on the 34 that debuted in the first six months of 2016.
Of the 57 new 2017 entrants, 49 had a market capitalisation of under $100 million, seven were between $100 million and $500 million, and only one had a capitalisation above $500 million, HLB Mann Judd found in its mid-year IPO (initial public offer) report.
Six investment companies and five software and services companies were among the listings but HLB Mann Judd partner Marcus Ohm said there was finally some life returning to the small mining sector.
"If you dig down into the numbers, it's actually based on three commodities: gold, cobalt and lithium," Mr Ohm said.
There have been five gold miners listed, three in cobalt and three in lithium.
The number of cobalt and and lithium companies reflected increased demand - and pricing - for the minerals which are used for batteries that power portable devices and electric vehicles.
HLB Mann Judd said the domination of small-cap companies among new listings meant that the total amount of money raised from IPOs in the first six months of the year was only $1.9 billion - down from $2.5 billion a year earlier.
Small caps also make up a significant number of the companies that have applied to list in the second half of the year, so the total amounts raised in 2017 may be well down on the preceding years.
Of 21 companies that had applied to list as of June 31, 10 were in the materials sector, seeking to raise a total of $75.5 million.
HLB Mann Judd said that in the first half of 2017, four life sciences and pharmaceuticals companies, including some in the medical marijuana sector, listed on the share market.
Mr Ohm said there had been a marked decline in the number of companies listing via a "reverse takeover" or "backdoor listing" .
There were only 10 reverse takeovers in the first six months of the year, compared to 69 for the whole of 2016.
The decline reflected a change of ASX listing rules that came into effect in December 2016, and a shortage of already-listed "shell" companies for the new entrants to back into.
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