Markets: 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 Ltd. surged 50 per cent in their first day of trading on the ASX, 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 told Markets Spectator. “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 per cent, 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 per cent 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 today to bring his stake in the company to nine per cent, 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 per cent 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.