Small Talk: A tale of the Greeks and the soya bean stalk
Monday 23 June 2008
Stathis Giavroglou laughs alittle nervously when asked if his relatives fully approve of the decision to list the family business after 38 years of trading. The impression is that certain people took some persuading.
Soya Mills, a Greece-based soybean and seed oil processor and distributor, which has been a Giavroglou family business since 1970, will list on the Alternative Investment Market (AIM) in July. The group reckons it has already had positive feedback from investors over plans to raise €50m; the main marketing will take place in the next three weeks.
On the one hand Soya Mills is already well established and is not going to use the money as a get-rich-quick jape for the directors. The group will sell 30 per cent of the ordinary shares, with the cash partly being used to fund expansion plans. The rest will be spent on a joint venture with Tsakos Group to acquire three dry bulk vessels. The move into shipping is a hedge against transport expenses, which make up between 20 and 30 per cent of costs, says Mr Giavroglou, chief executive.
But – and it is a big but – raising money on the AIM has been very difficult in recent months, as investors shy away from smaller, riskier companies, and move to the main market for a less speculative punt. Soya Mills insists it is big enough – profits came in at €7.7m last year, up from €4.4m the year before – but the market is not generally minded to be helpful.
Mr Giavroglou, it seems, is prepared to miss the heady heights of €50m, having already decided that the joint venture will go out of the window if the investors do not come in.
Chief executive Scott Price reckons that Solana Resources is undervalued. Why? Well, it keeps finding lots of oil.
Solana, which operates in fiscally liberal Colombia, announced last week that it has successfully drilled a fourth site in its Costayaco field. The site, which already whacks out 7,000 barrels a day, and is a joint venture with another exploration firm, Gran Tierra, will eventually churn out much more, according to Mr Price, who admittedly does baulk at one analysts' report which claims that the field is capable of 70m barrels a year.
Whether the success this week means that the company is undervalued is unsure. Like most other oil and gas groups, Solana's share price has benefited hugely in the last six months on the back of the surge in the price of oil; on Christmas Day last year the stock was priced at 102.50p and is now up at a year high, closing on Friday at 266p.
The reason Mr Price is excited is that he thinks there is more to come, especially as Colombian infrastructure in the region, which he describes as the business's main risk, is due to be overhauled by next year.
If you like golf, don't go to Croatia. Not yet, anyway. The country has just two 18-hole golf courses, despite having a wealth of tourist potential with a huge coastline and a government that recognises that tourism is the way to massively increase the country's revenues.
That is where Cubus Lux comes in. The AIM-listed company, run by an Austrian executive chairman, works exclusively in the country (although there are plans to open operations elsewhere in the region).
The group's subsidiaries are together attempting to stitch up the whole tourist suite. It has casino licences, plans to open golf courses and developments that will contribute residential resorts and marinas.
Cubus Lux insists that it is on the same wavelength as the Zagreb government, which is keen to avoid "turning the Croatian coastline into another Costa del Sol," says the executive chairman, Gerhard Huber.
The company will announce its full-year figures on Tuesday, which, they say, will show considerable progress. If the group continues in the same vein, it might be worth packing up the golf clubs for your next trip to the Adriatic.
AIM-listed Vyke, which will post annual results tomorrow, reckons it is the next Skype, the cheap internet calls operator. The company is a voice over internet protocol (VoIP) service provider, specialising in calls over mobile phones. They say they can save call costs by between 65 and 95 per cent.
The analysts are pretty keen, too. Charles Stanley, an independent watcher, says that the stock price will reach 200p, and that VoIP providers will attract between 100 million and 250 million users across the globe in the next five years. "Vyke promises to do for the mobile communications industry what Skype did for the fixed telecoms industry," they say.
The traditional network providers will no doubt recognise the competition and the move to cut call charges and compete in less direct ways is already well under way.
Nonetheless, tomorrow's numbers should look good, helping Vyke to cement its already strong institutional following.
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