Cannabis, auctions, digital assets and renewables companies line up for London IPOs
An auction company, a cannabis-focused biotech and two investment trusts are among the companies planning to float in London amid continued bumper fundraising conditions.
Auction Technology Group (ATG), which focuses on the arts & antiques, industrial & commercial and consumer surplus markets in the UK, North America Bidspotter in the UK, US and Europe, said it is looking to raise funds on London’s main market by issuing new shares as well as offering existing shares being sold by certain existing shareholders.
It did not say exactly how much it is looking to raise, but that proceeds are targeted to lower its net debt to around 1.3 times last year adjusted EBITDA.
Last year, including acquisitions such Proxibid and Auction Mobility, it made £22.3mln of pro forma EBITDA from revenue of £52.3mln.
Led by chief executive John-Paul Savant, a former PayPal and Think Finance executive, ATG is targeting a free float of at least 25% following admission.
Cannabis-focused biotech, MGC Pharmacueticals is already listed in Australia said on Monday that it expects to complete its dual listing this month, which will make it one of the first cannabis-sector companies to float on the LSE’s main market.
As part of its London IPO, the company intends to raise roughly £5mln, which is plans to use to advance clinical trials of two drug candidates, increase distribution and complete construction of manufacturing facilities in Malta.
With a focus on the use of cannabis-derived medicines in the areas of neurology, oncology and autoimmune diseases, MGC will use part of the funds to pay for a Phase IIb clinical trial of one of its phytocannabinoid-derived medicines, CannEpil, which is designed as a treatment for refractory epilepsy.
The funds will be used to pay for the Phase III clinical trial of ArtemiC for treatment of Covid-19 infected patients, which is planned for the first half of 2021.
Co-founder and managing director Roby Zomer said the dual listing “will position the company for the next phase of its growth and development” and “will reflect our European-based research operations, as well as enabling the company to engage with investors in the UK, Europe, Africa and the Middle East”.
Two new investment trusts
The third company to confirm its IPO intentions today was Digital 9 Infrastructure, a newly established investment trust that plans to raise an initial £400mln invest in internet-focused digital infrastructure assets such as subsea fibre, data centres, terrestrial fibre, tower infrastructure and small cell networks including 5G.
Externally managed by Triple Point Investment Management, whose other funds include investment trusts focused on social housing and energy efficiency infrastructure, the investment company will target a 10% annual net accounting return, including an initial 6% dividend yield per year on the 100p issue price for the first financial year, with a “progressive” dividend policy thereafter.
The manager plans to invest up to around £160mln of the IPO proceeds shortly after IPO into Aqua Comms, a platform owning and operating some 20,000 km of trans-Atlantic subsea fibre, which has a range of global content providers including Facebook, Amazon, Apple, Netflix, Google and Microsoft and telecom service providers as long-term contracted customers.
On top of that a pipeline of over US$3bn in identified opportunities includes a right of first refusal from Aqua Ventures Ltd, the third party developer registered in Jersey that developed Aqua Comms, giving exclusive access to its development asset portfolio.
Of the pipeline, around US$1 billion is expected to be ready to invest in over the next 12 months, the company said in the statement.
Meanwhile, NextEnergy Renewables Limited (NREN) said it is looking to float in London and raise up to £300mln to invest in attractive private renewables and energy transition infrastructure.
The investment trust, which is to be run by NextEnergy Capital, which some London investors will know from its NextEnergy Solar Fund, aims to invest in “new key transformative energy transition infrastructure”, such as hydrogen and battery storage, to help tackle climate change whilst reducing the global use and reliance on fossil fuels.
Its target is a net total returns of 9-11% per annum, including the target dividend and capital appreciation, with the target dividend of 3p for 2021 and 5.5p per share for its first full financial year to 31 December 2022, and then growing progressively thereafter.
NextEnergy Capital said the trust should offer greater portfolio and risk diversification by geography, technology and revenue than that offered by other listed renewable energy funds.
Also in London’s IPO market, Dr Martens PLC (LON:DOCS) is due to begin full trading this Wednesday after saying its offer was eight times oversubscribed, with online card specialist Moonpig also on the verge of completing its £1.2bn float.
Money sloshing about for IPOs and M&A
Last month saw US$49.2bn raised in the IPO market globally, according to Dealogic data, up more than fourfold compared to a year ago, as companies took advantage of booming stock markets.
For London’s AIM market, that included Nightcap PLC (LON:NGHT), which is looking to take advantage of the turmoil in the UK’s premium bars segment after the destruction wreaked by the coronavirus pandemic.
December was very busy for London listings, with newcomers including Pineapple Power Corp (LON:PNPL), Wildcat Petroleum PLC (LON:WCAT), Vector Capital Plc (LON:VCAP), Ecofin US Renewables (LON:RNEW), Schroder BSC Social Impact Trust (LON:SBSI), Abingdon Health plc (LON:ABDX), Tirupati Graphite PLC (LON:TGR), Intuitive Investments Group plc (LON:IIG), HeiQ PLC (LON:HEIQ) and Helium One Group Ltd (LON:HE1).
Previous funding buoyance and the strong market is also fueling M&A activity, which hit US$314bn for the past month, Dealogic said, which was the fifth-best start to a year since records began, almost a third of that seen in the second half of 2020.
February off to a solid start in London too, with JD Sports Fashion PLC‘s (LON:JD.) continued shopping spree in the US, Asos PLC’s (LON:ASC) £265mln deal for four Arcadia brands and a smaller deal for Euromoney Institutional Investor PLC (LON:ERM).
Boohoo (LON:BOO) also last week confirmed it is eyeing some other of Arcadia’s retail assets, while Royal Dutch Shell PLC (LON:RDSB) is reported to be closing in on the acquisition of the Post Office’s broadband business.