Hong Kong bourse attracting Aussie players

NEWS Clive Palmer’s Resourcehouse is seeking to raise up to $US3.62 billion ($A3.39 billion) in an IPO ahead of its listing on the Hong Kong stock exchange next month may be a sign of more to come for China’s financial gateway.
Hong Kong bourse attracting Aussie players Hong Kong bourse attracting Aussie players Hong Kong bourse attracting Aussie players Hong Kong bourse attracting Aussie players Hong Kong bourse attracting Aussie players

 

Staff Reporter

Resourcehouse will join Swiss commodities trader Glencore International which launched the exchange’s biggest IPO this year, an $US11 billion float.

The world’s seventh largest exchange, the third largest in Asia, has already lured a number of Australian resource companies keen to access the financial clout of their nearest neighbour.

The HKSX offers strong liquidity and high price-to-earnings ratios, while others, forced to temporarily shelve their dual listing aspirations following Japan’s devastating tsunami and earthquake in March, are now being dusted off.

Waiting in the wings are lithium miner Galaxy Resources and lithium hopeful Reed Resources.

Another contender OM Holdings has been embroiled with its major 11.4% shareholder Consolidated Minerals, which is not keen on its listing plans, citing dilution of shareholder interests.

ConsMins voted against a notion to change by-laws relating to OM’s Hong Kong listing at its annual general meeting.

It followed through by taking OM to the takeovers panel in a bid to block the move.

However, OM has since received legal advice that ConsMins’ blocking bid would have no impact on its listing aspirations.

Iron ore miner Fortescue Metals Group has also said it is toying with the idea of secondary listing in Hong Kong.

The first Australian play to seek a dual listing on the exchange back in 2007 was Sino Gold, the exchange a perfect fit for a company which built its production base in China.

But whether the HKSX will replace the more traditional sources of investment capital found in Toronto and London, particularly given the proposed merger of the two exchanges designed to create a transatlantic group with a market capitalisation of $C5.8 trillion, remains to be seen.

Analysts approached by MiningNewsPremium.net believed the merger would have no impact, but agreed that Hong Kong would grow in importance as a complementary service, but not one suited to juniors given its stringent JORC resource listing requirements.

Typically, it is a market for companies valued at around $500 million, and companies seeking a presence need to at least issue $100 million of new equity to ensure their Hong Kong listed shares have a stable footing to trade from.

However, exchange regulators are reportedly seeking changes to some of its dual listing requirements in a bid to improve the framework and open the doors further to overseas investment.

“Hong Kong has certainly been growing over the last five years,” MineLife analyst Gavin Wendt told MNP.

“It makes sense for Aussie companies to tap into the growing capital base in Hong Kong, especially given that we sell so much of our product into Asia.

“It will continue to be of growing importance for Australian companies.”

Wendt said Toronto would remain one of the major markets for emerging companies and was stronger than ever, while London had lost its ranking in the last two years.

However, Pursuit Capital’s Andrew Rowell and Resource Finance Corporation’s Stephen Allen painted a different picture when it came to London and the AIM.

“AIM has gone off the boil in the last couple of years but it still very much open for business and doing quite well,” Rowell told MNP.

“There is lots of money being raised in London at the moment and most of the brokers we spoke to in February at the Mining Indaba in Cape Town were rolling in deals.”

He said Australian companies with assets in Africa or Europe would be more suited to London’s AIM, while those with plays in Canada or North and South America were more a fit with Toronto

“Projects in Australia would be more of an attraction to Hong Kong, particularly for bulk commodities,” he said.

Allen’s message was simple.

“If you want to get capital in the mining business you go to London,” he said.

“It doesn’t necessarily mean that you list on that market, but if you do, you certainly get access to a larger pool.

“London is much better than it was, but it not a place where you go to raise small amounts of exploration money, it is where you go if you want to raise development capital.”

To this end, statistics provided by AIM on its website had 23 new Australian companies listed with a collective market capitalisation of 1.8 billion pounds to the end of last month.

The bulk of companies listed on AIM were from Africa, with 54 listed, valued at £8.2 billion, followed by China with 43 valued at nearly £4.5 billion.

According to data compiled from the Intierra database, there are a total of 44 Australian companies with a secondary listing on the AIM.

These companies are Allied Gold, Altona Energy, Archipelago Resources, Auzex, Baobab Resources, Beacon Hill Resources, Bellzone Mining, Berkeley Resources, Bezant Resources, Caledon Resources, Churchill Mining, Coal of Africa, Condor Resources, Consolidated General Minerals, Continental Coal, Creat Resources, DiamonEx, Discovery Metals, ECR Minerals, EMED Mining, European Nickel, Ferrum Crescent, Forte Energy, GCM Resources, GGG Resources, Griffin Mining, Herencia Resources, Kalahari Minerals, Leyshon Resources, Lochard Energy Group, Mariana Resources, Metminco, Minera IRL, Natasa Mining, Norseman Gold, Nyota Minerals, Premier Minerals, Range Resources, Red Emperor Resources, Scotgold Resources, Solomon Gold, Sylvania Platinum, Thor Mining and WildHorse Energy.

Of that list, Auzex is yet to list, contemplating the move in a bid to fight off a takeover attempt by its equal partner in the Bullabulling gold project in WA GGG Resources.

Nickel miner Western Areas is also targeting an AIM listing of FinnAust Mining and plans to tap Swedish and UK investors to raise up to £7 million in pre-IPO seed capital.

Gold producer Medusa Mining cancelled its AIM listing in favour of a move to the main board of the London Stock Exchange in April.

Values of companies listed on the TSX Venture Exchange for April, according to its website, totalled $C5.75 billion, only slightly down from the $5.85 billion measured in March, but up substantially on the $2.88 billion for March 2010.

Those listed on Toronto’s main bourse were valued at $115 billion.

Some of the Australian companies already with a presence on the TSX are Ivanhoe Australia, Equinox Resources, OceanaGold, Magma Metals, Perseus Mining, Orocobre, Canyon Uranium, Paladin Energy, Coalspur and EnviroGold.

Meanwhile, tungsten miner Heemskirk Consolidated and New York-based private equity firm Almonty Partners are targeting a third quarter listing on the TSX Venture Exchange for a new tungsten vehicle if shareholders agree to the deal this month.

MNP is a sister publication of International Longwall News.

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