Australian Renewable Energy Firm Axiom Plans IPO
Date: 26-Sep-06
Country: AUSTRALIA
Melbourne-based Axiom, which makes biodiesel fuels from renewable plant extracts and animal fats, is offering about 51.5 million shares at 70 Australian cents each in the initial public offering (IPO) to help fund its first biodiesel production plant.
Fund managers said the likelihood of continued strong growth in biodiesel, driven by the increasing numbers of motorists turning to diesel-powered cars as petrol prices soar, is a key selling point for Axiom.
"There has been a lot of interest in diesel these days given the high petrol price environment," said a fund manager at a European firm, who declined to be identified.
"Axiom is probably in the right market," he added.
Car manufacturers such as France's PSA Peugeot Citroen have already started selling cars that run on diesel in Australia and more are expected to follow suit.
The plant will have a production capacity of 150 million litres of biodiesel a year. Australian consumption of diesel fuel is around 15 billion litres a year.
Axiom's share offer comes as worries over a US economic slowdown and over the possibility of more interest rate rises this year have dampened investors' risk appetite.
Australian IPOs raised just A$2.8 billion in the first six months of 2006, compared with A$14.41 billion raised in the whole of 2005.
Uncertainty over the market outlook was behind a disappointing trading debut on Monday for another alternative fuel maker, Sterling Biofuels International Ltd.
Sterling, which plans to build a plant in Malaysia to process palm oil into biodiesel, started trading at its issue price of A$1.00 before slumping as much as 12 percent to an intra-day low of A$0.88 as at 0338 GMT.
But demand remains healthy for the right sort of offer, others said.
"People are now more selective but there is still a lot of liquidity in the market," said Sinclair Currie, a portfolio manager at Deutsche Asset Management.
Axiom's IPO closes on Oct. 20 and trading of its shares on the Australian Stock Exchange (ASX) is expected to commence on Oct. 31.
Axiom had planned for an IPO in 2005 but backed out after the government said it would tax the company's diesel produced from waste plastics -- a product Axiom planned to make in a secondary operation but which it has since scrapped.
(US$1=A$1.33)
