Surge in IPOs to provide mining bonanza in 2010
In 2010, mining companies are expected to
raise record amounts of capital on global stock markets, according
to a study by leading business adviser Grant Thornton. The study
points out that £958 million was raised by existing AIM mining
companies through 'secondary' issues in 2009, more than any other
year besides 2007. The best month was December with £240 million
raised.
"Following unprecedented activity in recent
months, we expect mining companies to raise record amounts of
capital on global stock exchanges in 2010. We should also see a
significant increase in the number mining companies floating on
stock markets," commented
Gerry Beaney,
Head of Capital Markets at Grant Thornton UK.
2009 only saw two mining companies achieving
admission to AIM, raising a total of just £1 million. In terms of
admissions, 2009 had generally been a poor year for AIM which only
recorded 36 admissions raising a total of £740 million. While there
were no mining company IPOs on London's main market, UK listed
mining companies raised almost £12 billion through secondary issues
in 2009.
There was greater IPO activity among mining
and metals companies in Australia, with 10 IPOs on the Australian
stock exchange raising approximately US$250 million, with US$18
billion raised through secondary issues. Busier still was the
Toronto exchange which raised C$22 billion through equity
financings.
"I am confident that the London Stock Exchange
will increase its market share of IPOs, because it is attractive to
international investors who value its unrivalled corporate
governance standards and the transparency that this provides,"
Beaney argued.
Large-cap mining companies were also active in
the secondary markets, with substantial sums raised by companies to
repair balance sheets and build war chests.
"The market's strong preference for secondary
fundraisings reflected a more risk-averse approach on the part of
investors. They were willing or perhaps obliged to support their
existing portfolio rather than invest in new companies.
Nevertheless, the fact that investors snapped up vast amounts of
new equity by listed mining companies demonstrates their keen
interest in the sector. This interest should translate to an
increase in IPO's in the coming months," said Beaney.
"Even for exploration companies, the long term
underlying fundamentals are strong. Once confidence returns to
markets, there will come a point where the risk-weighted returns
from investment in exploration projects will exceed the cost of
capital. At that point, we can expect to see renewed IPO activity
on AIM and on other world markets. After all, today's exploration
company is tomorrow's producer," concludes Beaney.
ENDS
For further information please
contact:
Alexander Wessendorff, Grant Thornton press
office, 020 7728 2048