Mining boss: Journey from Aim to main market ‘too difficult’
The mining boss behind the London main market’s newest member has said his firm would not have transferred from Aim had he known how complicated the process would be, despite the junior market partly existing to act as a stepping stone to London’s principal exchange.
Cobus Loots, the chief executive of South African-based gold miner Pan African Resources, told City PM the combination of onerous due diligence and legal box ticking made moving to the main exchange “a lot more work” than his firm expected.
“It’s easy after the fact. We have a great team and we had fantastic advisers, which is helpful. But it’s always more difficult than you think,” he said in an interview after his company moved to a main listing on Friday. “It’s like a lot of things in life – if you knew what it would take initially, you wouldn’t do it.”
Pan African Resources’ shares had been traded on Aim since 2007, under a dual primary listing arrangement with the main board of the Johannesburg Stock Exchange (JSE). But a two-year boom in the gold price – and it ramping up production – has helped its share price to more than quadruple since the start of 2023, paving the way for its transfer.
Loots’ comments will give succour to the growing chorus of voices calling om the government to announce a major revamp of laws around investing both to help encourage a greater number of IPOs and stem the tide of delistings that have long blighted London’s primary exchange.
The CBI is one of several influential bodies to have called on the Chancellor to announce a host of pro-investment measures to revive the beleaguered bourse, including loosening bonus rules, raising the Individual Savings Accounts (Isa) limits and slashing stamp duty on shares. Subsequent reports have suggested Rachel Reeves may cut the limit on Cash Isas and introduce a two-three-year holiday from stamp duty on the shares of newly listed companies in a bid to attract more investment into London equities.
The mining boss’s remarks will also pile fresh scrutiny on the Financial Conduct Authority’s landmark overhaul of listing rules, which sought to streamline the regulatory burden on companies hoping to list in London. The simplified rules, which came into force in July, sought to relax some of the City watchdog’s stricter demands on constituents to seek shareholder approval for small transactions; a reason cited by Cambridge-headquartered tech darling Arm for its decision to re-list in New York.
Mining industry reassesses ties to London
But Pan African Resources’ decision to retain a listing in London will also be seen as a rare show of faith in the LSE at a time when several mining majors have been re-evaluating their ties to the capital. Earlier this year, Glencore conducted a strategic review into whether to move its primary listing to New York, which it eventually shelved over fears it would not be included in the all-important S&P 500 index. And Rio Tinto remains under pressure from a vocal minority of shareholders to emulate BHP’s 2021 decision to unify its listing in Sydney.
Loots blamed a combination of dwindling coverage of miners among UK-based investment analysts and the well-documented struggles in the UK’s real economy for his sector’s weakening ties to London, which has traditionally been the financial home of mining.
“The number of mining-focused analysts… is less,” he said. “And to some extent the fortunes of the capital market is also tied to the fortunes of the country and the perceptions around the country. It hasn’t been an easy time for the UK. We’ve seen a lot of money leave the UK, going to the US and to Europe, but these things are trends and and hopefully that trend reverses.”
Pan African Resources is one of five companies to have moved from Aim to London’s main market this year, in a growing sign of firms and investors’ growing disaffection with Aim. Its £1.7bn market capitalisation means it will be immediately eligible for inclusion in the FTSE 250, which would see the stock included tracker funds.
Loots confirmed he hoped his firm would be included in London’s secondary index as soon as this year.
The London Stock Exchange and Financial Conduct Authority declined to comment.