Cleantech accounted for 6% of 2006 fundraising on AIM - the market of choice for early stage companies

First published in Cleantech magazine. March 2007 © Cleantech Investor Ltd. 2007

AIM is currently the sixth most active IPO market in the world, larger than the Deutsche Börse or Tokyo Stock Exchange. In terms of the number of quoted companies, AIM overtook the LSE in 2006 and looks set to continue to be the market of choice for early stage companies. New Energy Finance (NEF) statistics show that clean energy companies accounted for almost 6% of total AIM fundraisings in 2006 and that clean energy companies raised over £3.1 billion on AIM, 67% more than in 2005.

Jeffries International, part of the Jeffries Group investment bank, undertook a survey of companies attending an alternative energy and clean technology conference in London last year. The results of the survey showed that 56% of companies expect AIM to be the most important exchange for the sector in five years. Nasdaq was voted most likely to be the leading exchange by 28% of the respondents, with only 15% replying that they expect local exchanges to play the leading role.

AIM depends to a large extent upon domestic UK investors. Tax breaks for individual UK based AIM investors do not apply if a company is listed on a recognised foreign exchange as well as AIM, but UK institutions have been keen investors in international companies in the past. There issome evidence of a reduced appetite for international companies from UK institutions, a trend which is likely to become more pronounced, at least in the short term, in the wake of the return of volatility to markets at the end of February and beginning of March this year. Concerns about Chinese companies saw shares in Chinese companies such as ReneSola slump during the selloff.

A growing number of UK brokers have expanded their advisory arms to address international companies wishing to list on AIM and there have been some moves by brokers to tap into the base of international investors who wish to invest in AIM stocks. Spanish biodiesel manufacturer, BeCCo, recently attempted to circumvent the dependence upon UK institutions for an AIM listing by raising funding from investors elsewhere in Europe. However, BeCCo’s broker, Bell Lawrie, failed to raise sufficient funds from these target investors and the company was forced to postpone plans.

There was a rush of listings in the second half of last year, after the market correction in May 2006 had forced a number of companies to delay their plans for listing. There were eight new listings in London in December. Of the eight new ‘clean technology’ or related companies which listed in London in December, seven joined the AIM market and one arrived on the Plus market.

RECENT LISTINGS

China CDM Exchange (24.5p)

China CDM Exchange listed on the Plus market on 15 December via an admission and was valued at £25 million. Incorporated in Jersey, China CDM Exchange provides brokerage, advisory and research services on Asian carbon credit generation and trading businesses, working with the framework of the Clean Development Mechanism of the Kyoto Protocol. It is currently working on 26 projects with annual aggregate annual Co2 emissions of 25 million tonnes. London Asia Corporate Finance acts as the corporate advisor. The shares are currently trading at the listing price of 24.5p.

Clean Energy Brazil (105p)

Clean Energy Brazil is an investment company which will invest in the sugar and ethanol industries in Brazil. The company, which is backed by Numis Securities, raised £100 million at £1 per share on 18 December. It had already agreed on an initial investment of $137 million into an integrated sugar/ethanol plant in Brazil and the share price has gained 5% since listing to trade at 105p.

Phaunos Timber Fund Limited ($1.06)

Phaunos Timber is another investment company, which listed on AIM on 20 December. Phaunos raised $115 million in a placing of 115 million shares at $1 per share, by Shore Capital and LCF Edmond de Rothschild, valuing the company at $115 million or around £57 million. Phaunos AIMs to invest in timber on a global basis. The shares are trading at $1.07.

Polymer Logistics (95p)

Polymer Logistics, which manufactures reusable packaging, joined AIM on 13 December, raising £17 million from a placing at 82p per share and was valued at £65.8 million on the first day of trading. Collins Stewart is the Nomad and broker to Polymer Logistics, which is a Dutch based company. The shares have performed strongly and are currently trading 16% ahead of the placing price at 95p.

Renewable Power and Light (111.5p)

Renewable Power and Light began trading on AIM on 14 December with a market capitalisation of £60m. The company, which raised £40 million through a placing at 70p per share, has acquired two co generation power plants in the US for conversion to run on biodiesel. Libertas Capital is the broker
and Grant Thornton the Nomad.

Sabien Technology Group (68.5p)

Sabien Technology listed on AIM on 20 December. Sabien’s M2G system reduces energy consumption in commercial and industrial boilers. The company raised £3.2m million through a placing by Bell Lawrie and £0.8 million from the issue of loan notes. Sabien was capitalised at £13.8 million at the placing price of 52p per share. Brewin Dolphin is acting as Nomad. The shares rallied strongly, reaching a peak of over 77p but have fallen back slightly.

Traction Technology (32.5p)

Traction Technology, a hybrid and all-electric vehicle engine developer, focusing on bus engines, arrived on the AIM
market on 21 December. Traction raised £0.8 million through a share issue by Gall & Eke Corporate Partners at 28p per share and was capitalised at £9.3 million at the issue date. The shares reached a peak of 33.5p.

Verdant Holdings (13.25p)

Verdant Holdings shares were listed on AIM on 22 December at a price of 10p, valuing the company at £3.45 million. Verdant raised cash with a view to investing in environmental opportunities – a very broad brief which we assume will be narrowed down as these opportunities are defined more precisely. The Nomad is Grant Thornton and the broker is Fairfax. The stock has traded as high as 15p since listing.

The rush of IPOs in the sector in London slowed down somewhat in the New Year. However, January saw the listing on AIM of Helius Energy and in March, Vycon shares were listed (see AIM New Issue comment by Denis Gross).

Helius Energy (28p)

Raising £2 million through the issue of 7.8 million shares at 26p, Helius was valued at £18 million at the placing price. Nomad and broker is Daniel Stewart. Helius plans to install and operate biomass energy plants in the UK and South Africa for the burning of a range of feedstocks including residue from bio-ethanol production. The shares rallied strongly on listing, hitting a peak of 41p, but have settled back at lower levels.