Fertoz gets an IPO kick

A small phosphate explorer has turned out to be one of the year’s strongest IPO performers.

Shares in Fertoz (FTZ) surged 50% in their first day of trading on the ASX yesterday, making the phosphate explorer one of the year’s better performing floats.

The rally gives Fertoz a market value of $13.5 million, after the firm issued 20 million shares at $0.20 a share to raise $4 million.

This year there have been 28 announced Australian IPOs while 24 have priced, according to Bloomberg. Last year 53 IPOs priced compared with 63 announced deals.  

Fertoz Chairman James Chisholm says the company didn’t misprice its IPO, which was managed by Blackwood Capital.

 “Our philosophy has been to ensure there is visible upside as we don’t like to extract every possible cent from an IPO,” Chisholm said. “It’s better to be conservative so you can get into the market and enjoy support.”

Fertoz shares rose as much as 12 cents, or 60%, to an intraday high of 32 cents before closing at 30 cents.The company has a total of 45 million shares. Companies usually sell less than 50% of their total stock in an IPO as original investors may want to keep part or all of their shareholding as the executive team seeks new funds to develop the business.

Jeremy Bond, who runs Terra Capital, bought 200,000 Fertoz shares yesterday to bring his stake in the company to 9%, making the small cap resources fund manager the second-largest shareholder in Fertoz.

“James (Chisholm) is a straight shooter who over-delivers, which is rare in the small cap space,” Bond said. “Fertoz has the capacity to get into cash flow relatively quickly, possibly next year, as it’s a simple operation.”

Phosphate is one of the three essential ingredients for fertiliser, but about 90% of the world’s phosphate deposits are in North Africa and the Middle East.

Fertoz is seeking to be a low-cost miner and supplier of high-grade phosphate to Canada and the US, who want to diversify their phosphate supply away from the volatile region where most of it is mined.

Chisholm says the company’s exploration is focused on Canada’s British Columbia over the next two years.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles