[LONDON] Cobalt Holdings unveiled plans for an initial public offering in London in what could potentially be the biggest UK first-time share sale in more than two years.
The firm, which purchases and holds physical stock of the key battery metal, wants to raise about US$230 million through the sale of new shares, according to a statement on Monday (May 12). Glencore International and entities managed by Anchorage Structured Commodities Advisor have agreed to take up about 20 per cent of the shares to be offered, the company said.
A London listing for Cobalt Holdings could be a shot in the arm for IPO activity in the UK, which has suffered from a dearth of offerings in recent years and high-profile exits. Companies have raised less than US$85 million from first-time share sales in the UK so far this year, compared with almost US$4 billion for all of Europe, according to data compiled by Bloomberg.
Cobalt Holding’s IPO could potentially be the biggest since Ithaca Energy raised the equivalent of about US$300 million in the last quarter of 2022.
The proceeds of the listing will be used to buy about 6,000 tonnes of cobalt from Glencore at a below-market price, Cobalt Holdings said. Cobalt prices have plunged over recent years as a result of oversupply, but the company said the slump creates a buying opportunity ahead of an eventual tightening of the market.
Unlike other battery metals including nickel and lithium, which are mined as standalone products, cobalt is produced as a by-product of other mining operations. That means producers don’t tend to dial back output even if prices collapse, and in recent years the market has become swamped by supply coming from copper mines in the Democratic Republic of Congo and nickel mines in Indonesia.
Cobalt has historically been a difficult market for investors to access, given that there are no large pure-play miners of the metal, and futures markets are much less liquid than large industrial commodities such as copper.
Previous ventures to offer investors exposure to cobalt have also proven to be controversial, with Toronto-listed firm Cobalt 27 being taken private by its key hedge-fund backer in 2019 after a collapse in prices, and a high-profile theft of its metal from storage facilities in Europe.
Citigroup is leading the Cobalt Holdings IPO, according to the statement. BLOOMBERG