Whenever there's an initial public offering (IPO) on the ASX, it understandably generates a lot of buzz and anticipation. After all, it's not every day that a new company joins the ASX boards.
ASX IPO investors were probably even more excited for a fresh stock market debut this July, following the blockbuster IPO of Guzman y Gomez Ltd (ASX: GYG) that we saw back in June. That IPO was a smashing success, with early investors bagging up to 36% worth of gains on Guzman's first day on the ASX.
So it's probably fair to say that the ASX IPO of rare earths explorer Axel Ree Ltd (ASX: AXL) today was going to draw some eyeballs.
Axel Ree owns four prospective rare earths sites in Brazil, which have all reportedly shown high-grade rare earth element mineralisation, particularly niobium, neodymium and praseodymium.
After the company had discovered the potential of these sites, it planned this IPO in order to raise the additional capital necessary for development.
Before today's ASX IPO, the compnay had just $500,000 in cash reserves. However, the float is expected to result in that figure swelling up to $13.8 million.
But unfortunately for those investors hoping to see (or enjoy) a successful ASX IPO, it hasn't gone too well.
Axel Ree stock plummets on ASX IPO
Axel Ree shares debuted on the ASX today at a listing price of 20 cents each. With 174.5 million shares on issue, that would have given Axel Ree a market capitalisation of $34.9 million if investors obliged that listing price.
Of Axel Ree's 174.5 million shares, the company's board and management have retained 63.6 million (or 36.4%). Institutional investors in the company's ASX IPO own another 65 million (37.3%). 100 million shares (57.3%), presumably held by management and insiders, will remain under escrow during this float.
But Axel Ree's ASX debut hasn't exactly gone to plan. When the shares began trading, they opened at a value of just 13.5 cents each – down 32.5% from that 20-cent listing price. Things did improve a little for the company this morning, with Axel stock getting up to 14.5 cents.
But as it currently stands, the Axel Ree share price is currently (at the time of writing) languishing at just 11.7 cents per share after getting as low as 11.5 cents earlier this afternoon. That latter price is a good 42.5% below the ASX share's IPO price.
It will be interesting to see how the ASX's newest kid on the block fares over the rest of this week's trading. But this has certainly not gone how Guzman y Gomez's ASX IPO went.
