|
London/Toronto: London's deep capital markets, tolerance of political risk and friendlier regulation is trumping other bourses in attracting major listings of miners although Toronto is still tops for junior and exploration firms.
London is now home to most of the world's big mining groups after recent mergers stripped Canada of its prize companies.
In January 2005, the value of mining companies with primary listings on the main markets of London and Toronto were about the same at around $117 billion. But three years later London had overtaken its rival, growing to $409 billion versus $320 billion, a study by Ernst & Young showed.
A succession of sizeable mining firms from Latin America, and eastern Europe have flocked to London for IPOs that have raised billions of dollars.
This comes as high metals prices and a scarcity of resources has driven miners to explore in countries that would have been overlooked by major players in the past due to stability concerns.
Political risk
"London is viewed as a place where perhaps there's a bit better understanding of the political risks," said Tom Whelan, Ernst & Young's Canadian mining leader.
In May alone, Mexico's Fresnillo, the world's biggest silver producer, raised £905 million in a London flotation while the IPO of Czech coal miner New World Resources raised £1.1 billion.
Bankers say more mining IPOs are expected in coming months on the London Stock Exchange.
"You get this momentum effect. You've got so much critical mass of mining companies with London listings now for institutions," said analyst Tom Gidley-Kitchin with Charles Stanley in London.
The mining sector now accounts for a tenth of London's blue chip FTSE 100 index and nine per cent of the total market.
A heavier burden of regulation in North America and the lack of a single securities regulator in Canada has also contributed to the shift, analysts and company executives said.
Regulation was a key issue when Kazakh firm Eurasian Natural Resources prepared an initial public offering last year.
"There were two logical choices, London or New York, and we felt more comfortable with the modus operandi in London," said chief financial officer Miguel Perry.
|
