Industry Told to Be Ready for a Rise in IPOs

2 February 2010 (Last Updated February 2nd, 2010 18:30)

A revival in equity markets is expected to lead to a record amount of capital being made from initial public offerings, according to experts at accountancy firm Grant Thornton who spoke with Bloomberg this week. Mining companies will raise money on various stock exchanges this year, mar

A revival in equity markets is expected to lead to a record amount of capital being made from initial public offerings, according to experts at accountancy firm Grant Thornton who spoke with Bloomberg this week.

Mining companies will raise money on various stock exchanges this year, marking a stark change from last year when very few IPOs were launched.

This year Moscow-based miner OAO Metalloinvest said it is considering an IPO, along with Russian diamond producer ZAO Alrosa.

While in Australia, mining and metal companies raised $250m through ten IPOs and $19bn through secondary offerings, while C$22bn ($20.8bn) was raised through equity financing on Toronto's stock exchange.

No mining IPOs were listed on the London Stock Exchange primary market in 2009 while its Alternative Investment Market (AIM) had two IPOs that raised £1m ($1.59m).

Last year, however, through secondary offerings, UK-listed mining companies managed to raise £12bn ($19.14bn).

In 2009, AIM-listed mining companies raised £958m ($1.5bn) through secondary offerings, which was much more compared to any other year excluding 2007.

Grant Thornton head of Capital Markets in UK Gerry Beaney told Bloomberg the huge amount of secondary offerings showed that investors adopted a risk-averse approach.

"Nevertheless, the fact investors snapped up vast amounts of new equity by listed mining companies demonstrates their keen interest in the sector,” Beaney said.

"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.”