London prepares for its biggest IPO in two years as Cobalt plans debut

Cobalt Holdings Plc unveiled plans for an initial public offering in London in what could potentially be the biggest UK first-time share sale in almost two years.

The firm, which purchases and holds physical stock of the key battery metal, wants to raise about $230 million through the sale of new shares, according to a statement on Monday. Glencore International AG and entities managed by Anchorage Structured Commodities Advisor have agreed to take up about 20% of the shares to be offered, the company said.

A London listing for Cobalt Holdings could be a shot in the arm for IPO activity in the UK, which has suffered from a dearth of offerings in recent years and high profile exits. Companies have raised roughly $200 million from first-time share sales in the UK so far this year, compared to about $4 billion for all of Europe, according to data compiled by Bloomberg.

Cobalt Holdings’s IPO could potentially be the biggest since CAB Payments Holdings Plc raised £291.5 million ($384 million) in mid-2023. Last week, iForex Financial Trading Holdings Ltd. also announced potential plans to list.

IPO proceeds

The proceeds of Cobalt Holdings’s listing will be used to buy about 6,000 tons of cobalt from Glencore at a below-market price, it said. Cobalt prices have plunged over recent years as a result of oversupply, but the company said the slump creates a buying opportunity ahead of an eventual tightening of the market.

Unlike other battery metals including nickel and lithium, which are mined as standalone products, cobalt is produced as a byproduct of other mining operations. That means that producers don’t tend to dial back output even if prices collapse, and in recent years the market has become swamped by supply coming from copper mines in the Democratic Republic of Congo and nickel mines in Indonesia.

Cobalt has historically been a difficult market for investors to access, given that there are no large pure-play miners of the metal, and futures markets are much less liquid than large industrial commodities such as copper.

Previous ventures to offer investors exposure to cobalt have also proven to be controversial, with Toronto-listed firm Cobalt 27 being taken private by its key hedge-fund backer in 2019 after a collapse in prices, and a high-profile theft of its metal from storage facilities in Europe.

Citigroup Inc. is leading the Cobalt Holdings IPO, according to the statement.