Franco Nevada IPO

Abstract:
Franco-Nevada IPO introduced in the year 2007 made the company go public after a gap of 5 years. Earlier, the company traded on the Toronto Stock Exchange. The capital raised form the IPO was intended for investment purposes. The write up below gives an overview of the same. Franco Nevada was originally set up by Seymour Schullich and Pierre Lassonde in the year 1982 is a unit of royalty holding.
Franco Nevada was bought again in the year 2002 by Newmont Mining Corporation in a “three way merger”, which included Normandy Mining Ltd of Australia for USD$4.2 billion. The company has invested in as many as 290 resource royalties and other investment opportunities. Franco Nevada IPO was released in the year 2007. The IPO yielded as much as USD$1.2 billion.

The total number of shares offered were as many as 72 million. The Franco Nevada IPO will mark the return of the company on the Toronto Stock Exchange after a span of five years.

On the first day of trading at the Toronto Stock Exchange following the release of Franco Nevada IPO, shares were up by 10 cents and were trading at $14.35. The money raised from the Franco Nevada IPO is likely to be used for financing royalty assets as well as equity investments of Newmont Mining Corporation.
Reports suggest that in the first half of the year 2006 approximately $48.6 million were earned by Franco Nevada as royalties and dividends.

This indicated that there was an increase of $43.7 million as compared to the previous year(2005).

The Franco Nevada IPO was also aimed at focusing more on gold. Initially, the officials of the company were a bit apprehensive about the success of the IPO being offered but later on found that there was an overwhelming response from the investors.

With regard to the assignment/allotment of the shares, the company representatives had stated that depending on the demand of the shares, the appropriate allotment of the shares would be done. The officials of the company were of the opinion that since there is a sluggishness in the housing market of the United States of America, investors have a tendency to invest in gold in order to “hedge” against the gradually weakening dollar as well as the rate of inflation.

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Last Updated on : 30th July 2013