Small Talk: Soaring agricultural prices help farmers lead the Alternative Investment Market
Monday 08 June 2009
Even the casual observer does not have to try too hard to find evidence of woe in various sectors on the Alternative Investment Market (Aim). For some time (and it has occasionally been chronicled in this column) various companies in high risk sectors like oil and gas exploration and biotechnology have struggled from a lack of funding and all too often business plans that assume too much on the upside.
One sector that has been very quiet in the last few months, however, and indeed one that is hardly known for being a wallflower when things are going badly is agriculture. The truth is that farmers are having a whale of a time with the prices of agricultural produce booming: wheat, for example, has risen from £90 a ton to £130 a ton in the last few months.
It should come as little surprise, then, that only the second Aim IPO of the year should come from a farmer.
Ok, we are not talking about an average farmer with a few carrots and sheep to look after as some people might imagine, but Braemer UK Agricultural Land, a farming group that will use the £20m it is hoping to raise to acquire as much as 10,000 acres agricultural land.
"General trends in agriculture and particularly in farmland values, together with the potential advantageous tax treatment associated with any investment, create an attractive combination for long-term investors irrespective of global stock market turmoil," said Dan Bate of WH Ireland, Braemer's appointed Nomad.
The group's stock is expected to start trading on 30 July, and with many brokers, investors and analysts believing that a successful IPO is needed to kick-start the market, most will be hoping Braemer's floatation gets away smoothly.
Swiss lope in for a 20 per cent stake in Jolly Ranch
*The trials and tribulations of many small-cap companies means that many of those which have managed to keep their heads above water are valued at rather silly levels. Last week, Nighthawk Energy, an oil and gas exploration group that has interests in the US, sold a 20 per cent stake in its rather nicely named Jolly Ranch project in Colorado, to the Swiss-based investment company San Severina Holdings in a £25m deal.
The sale values Jolly Ranch at 47p a share, which does make something of a mockery of Nighthawk's closing price of 44.5p on Friday. That must leave a cohort of chief executives who would love to dabble in a spot of merger and acquisition activity, cursing the banks' newly found conservatism.
Proximagen raises £50m war chest
*There are, of course, the upwardly mobile on Aim. One such group is Proximagen Neuroscience, which last week announced that it has secured a £50m war chest for acquisitions, merger and licencing deals.
Due to partnership agreements, Proximagen had something of a stellar past year, not least indicated by its share price growing by nearly 40 per cent. And there is no hiding the group's intentions for its newly acquired investor money. "We are working on a number of deals," said Ken Mulvany, Proximagen's chief executive. "I do not want to hang myself by being too precise about when and how the money will be spent, but we would like to see the first deal completed by the end of the year and the entire amount spent within the next two to three years."
Maybe a reason for investors' confidence (after-all this is money that has been handed over, without any indication about specific target being mentioned) was the recent appointment of Peter Allen as chairman of the group. Mr Allen, who joined in January, was charged with putting the group on the acquisition and licensing agreement path, having sealed his reputation as a deal-maker in the biotechnology sector.
Mr Allen has been appointed to the boards of several companies in the biotech industry. He is also the non-executive chairman of the London listed ProSkrakan and the private group, Chroma. He has also helped to manage the sale of two other biotech groups. He is the finance director of Abacus, which was sold to Avent Inc of the US last year and was a non-executive director of Acambis for a brief period last year, before it was sold to the pharmaceutical giant Sanofi-Aventis.
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