HAVE A GOOD READ OF THIS.Scintilla's under the radar 22Jun07 A...

HAVE A GOOD READ OF THIS.

Scintilla's under the radar
22Jun07

A PRIVATE Gold Coast equity investor making waves as a market 'bottom feeder' is set to accelerate its business growth by going public next month.

Scintilla Capital, a company founded by former stockbrokers Andre Marschke and Brad Simpson, has homed in on pre-float start-ups and market 'micro-caps' to turn its initial $1.2 million capital base into $3 million in just 12 months.

The company, which has 10 founding shareholders, is planning to become an unlisted public company next month, a move that will give it access to a bigger pool of capital.

Scintilla is preparing an information memorandum with a view to raising between $20 million and $50 million.

The Scintilla strategy is centred on its high-return 'micro-cap' fund, around which it builds more conservative strategies, including a capital guaranteed fund that utilises options.

The company's business model took seed while Mr Marschke and Mr Simpson were brokers with Smith Barney Citigroup's Gold Coast office.

Mr Marschke said the opportunity followed consolidation in the broking industry which saw several smaller players swallowed by their bigger rivals over the past five years.

"With the little boutique brokers gone, there was no one servicing smaller companies," he said.

Mr Simpson said the micro-caps in which Scintilla invested typically travelled under the radar of larger broking houses.

"None of the brokers are researching them. They are largely ignored until they get to around the $100 million mark."

Scintilla's portfolio contains about 30 companies, most of them listed, with the remainder just months away from listing.

"We will only get involved in seed capital investments where we know that listing is imminent and we are either working on (the listing) ourselves or we're very close to the people involved," said Mr Marschke.

The company has just participated in the float of minerals explorer RMA Energy, in which it turned a $25,000 investment into $500,000. RMA's 25c shares debuted at 85c and have since risen as high as $2.04.

UPDATE The shares have since retreated from those highs, closing yesterday at $1.79, up 38c.

Scintilla, with 250,000 shares, is among RMA's top 20 shareholders.

The Scintilla share portfolio is spread evenly between the mining and industrial sector, reflecting the market's current resources bent.

Mr Marschke and Mr Simpson, who each have more than 10 years' experience in the stockbroking industry, said the mining sector was proving fertile ground for Scintilla.

Although the mining boom was leading Scintilla to several opportunities in Perth, Mr Marschke said he was confident of also finding suitable investments on the Gold Coast.

He said despite the speculative returns produced, all Scintilla investments had to meet strict guidelines.

"Because we've been in broking, we know what to say no to," he said.

"With small companies, because they are technically riskier than bigger companies, you've got to really get to know the people.

"Sometimes we get right inside these companies."