Hello Mr J-the-One.
I remembered you said somewhere else - when I noted a story on this company - that the people in charge here are very professional, highly regarded, and you expect good things of them.
Anyway I decided to add another soupçon to my bowl, and bought a few shares to see what happens.
(remembering, however, that DDH1 drilling was not even able to list last year)
When it comes to floating the DDH1 Drilling business, the challenge for owner Oaktree Capital Management is shaping up to be convincing fund managers to outlay money for a business that operates in the mining services space.
Early investor meetings for an initial public offering of DDH1 Drilling were held on Thursday, and the feedback from fund managers is that the business is a strong performer in its sector, but they say that their appetite for drilling companies is low.
DDH1 generates $220m of revenue annually and $30m of earnings before interest and tax. It has plans for an IPO through Macquarie Capital and UBS.
Early estimates are that the business is worth about $400m, although sources close to the company say it could be worth closer to $500m.
DDH1 is Australia’s largest diamond-core drilling contractor and it is expected that less than half of the business will be sold down via an IPO, with founders Murray Pollock and Matt Thurston to retain their stake.
Drilling companies are performing relatively strongly at a time when many of the multinationals have left the Australian industry or have under invested, enabling DDH1 to increase its market share.
However, drilling companies are not thought to have much pricing power due to the number of industry players and building a competitive difference can be challenging, according to some fund managers.”
... “However, drilling companies are not thought to have much pricing power due to the number of industry players and building a competitive difference can be challenging, according to some fund managers.”
... Based in that I am thinking Dynamic must have a *real* competitive difference to be so eagerly welcomed ?
Do you know if it uses innovative blasting to minimise ore dilution? [ as per here?]
Anyway I hope you are well out there in the wherever, and I brought you some stories on the IPO to decorate the thread
Matt Freedman and Mark Davies of Dynamic Drill and Blast. Credit: Iain Gillespie/The West Australian
Bayswater-based Dynamic Drill & Blast will make its ASX debut today, two weeks earlier than expected after the company’s $5 million initial public offering was swamped with interest.
Lead manager JP Equity Partners closed the bookbuild offer just hours after opening it on July 6 when it received bids well in excess of the targeted raising.
Shares in the company, chaired by Alcoa’s former bauxite president Garret Dixon, have been issued at 20¢, with about 55 million on issue for an initial market capitalisation of $11m.
Former Emeco Holdings boss Laurie Freedman, who is the father of Dynamic’s executive director Matt Freedman, will retain a substantial holding in the company.
Dynamic has been operating since 2011 as a specialist drill and blast supplier across big mine production blasts to vibration-sensitive, close-proximity civil work.
The company’s has grown from $13m in 2018 to $19.1m in 2019, with the company recording a net profit after tax of $1.53m.
Dynamic provides contract and sub-contract services to miners including Rio Tinto, Fortescue Metals Group and Galaxy Resources.
The company is benefiting from a surge in activity in the WA iron ore and gold sectors as prices for the two commodities soar.
Dynamic plans to use the cash from its IPO to fund an expansion of its rig fleet and provide working capital to tackle a strong tendering pipeline.
Managing director Mark Davis described it as an exciting time for Dynamic and said the company was grateful for the support shown by strategic investors.
“Dynamic is now well-funded for our next phase of growth and we have a clear strategy in place to achieve that,” he said.
“The outlook for the WA mining industry is extremely strong, supported by strong growth forecasts particularly across the gold and iron ore sectors.
“We will continue to develop a pipeline of project opportunities and are buoyed by the level of tendering activity at the moment across both mining and civil infrastructure.”
Mr Davis said the listing had strengthened the company’s balance sheet and would help it to negotiate with finance and working capital providers.
Matt Freedman and Mark Davis of Dynamic Drill & Blast. Credit: Iain Gillespie/The West Australian
Bayswater-based Dynamic Drill & Blast has made a stunning ASX debut, listing at 150 per cent of its 20¢ issue price this morning. Shares in the mining services company came on at 50¢ and reached a high of 54¢ before easing slightly to 45¢ mid-morning. The early price action delivered investors who bought into its $5 million initial public offering a stag profit of more than 100 per cent.
The company listed two weeks earlier than expected after its IPO was swamped with interest and its book was filled within hours of opening on July 6. Lead manager JP Equity Partners received bids well in excess of the targeted raising with many investors wound back substantially on the holdings for which they had subscribed.
The success of the float highlights the strength of the WA mining sector and shows investors will still respond strongly to IPOs if the offering is right. The IPO market had been weak even before COVID-19, which further sapped investor interest in new ventures trying to raise cash in floats.
Dynamic has about 70 staff, 10 drill rigs, 21 light vehicles and ancillary equipment with clients including Fortescue Metals Group, Rio Tinto and Galaxy Resources.
Former Emeco Holdings boss Laurie Freedman has retained a 19.6 per cent stake in the company. Other significant shareholders include executive director and son of Mr Freedman, Matt Freedman, and managing director Mark Davis, each of whom hold a 15.1 per cent stake in the company.
Dynamic has been operating since 2011 as a specialist drill and blast supplier across big mine production blasts to vibration-sensitive, close-proximity civil work.
The company’s has grown from $13m in 2018 to $19.1m in 2019, with the company recording a net profit after tax of $1.53m.
The company is benefiting from a surge in activity in the WA iron ore and gold sectors as prices for the two commodities soar.
Dynamic plans to use the cash from its IPO to fund an expansion of its rig fleet and provide working capital to tackle a strong tendering pipeline.
Managing director Mark Davis described it as an exciting time for Dynamic and said the company was grateful for the support shown by strategic investors.
“Dynamic is now well-funded for our next phase of growth and we have a clear strategy in place to achieve that,” he said.
“The outlook for the WA mining industry is extremely strong, supported by strong growth forecasts particularly across the gold and iron ore sectors. “We will continue to develop a pipeline of project opportunities and are buoyed by the level of tendering activity at the moment across both mining and civil infrastructure.”
Mr Davis said the listing had strengthened the company’s balance sheet and would help it to negotiate with finance and working capital providers.
(20min delay)