ATH Resources, a Scottish open cast coal mining business, has floated on AIM, producing a significant return for London-based private equity firm Alchemy Partners.
Alchemy invested £3.1 million (€4.7 million; $5.7 million) in ATH in May 1998 and acquired another Scottish coal mine operator, Law Mining, in November 2003, supporting that acquisition with a £1.5 million follow-on investment.
The IPO on AIM priced the ATH stock at £1.36 per share, valuing the company at £40.5 million. Post IPO, Alchemy will remain the largest shareholder in ATH, retaining a 26.2 percent stake in the business.
So far Alchemy’s investment has generated a return of 4.4x its original investment and an IRR of 42 percent. Based on the initial price of £1.36 per share, Alchemy’s final exit could return 6.8x money and an IRR of 52 percent.
The ATH IPO is Alchemy’s second IPO this year, following the AIM flotation of IT software provider Civica in March, which returned £30 million to the firm.
In addition to Civica, Alchemy has this year exited business forms designer Grenadier Group via sale to management and the trade sales of Riverdeep and Goldsmiths.
The sale of Riverdeep, the Irish publisher of educational software netted Alchemy $175.4 million, 2x original investment and the sale of UK jeweller Goldsmiths to Icelandic retail group Baugur made a 3x return on its original 1999 engagement.
Alchemy invests through an unconventional fund structure, The Alchemy Plan, which has a £255 million per annum indicative capacity and to which investors commit a minimum £2 million on a rolling 12-month basis.
Investors pay fees based on a budget prepared by Alchemy each year, as opposed to the standard management fees charged by most partnerships.