- MicroSalt IPO to raise £10mn-£15mn
- PrimaryBid offer closes on 6 October
- Dealings start on 18 October
MicroSalt (SALT), a company that is commercialising a patented technology to produce full-flavour, low-sodium salt for food manufacturers and consumers, is raising £10mn-£15mn in an Aim IPO.
Alongside an institutional placing, retail investors can participate in a £2.5mn PrimaryBid Offer directly through its website or app, or through retail platforms including AJ Bell and Hargreaves Lansdown. The minimum subscription is £500 and the offer price will be determined by the book-building process in the institutional offer.
The new funds will be used over the next two years to accelerate sales and marketing efforts (£3mn-£4mn), expand inventory and general working capital (£2.25mn-£3.5mn), fund a new manufacturing facility to increase production volumes (£4.5mn), invest in headcount (£0.75mn-£1.0mn), and accelerate R&D spend on line extensions and product development for fast-moving consumer goods customers (£1.5mn-£2mn).
MicroSalt’s mission is to reduce excess sodium consumption, which significantly contributes to hypertension and heart disease. Its patented solution dissolves much faster on the tongue, thereby delivering the same sense of saltiness that is achieved with less salt and using half the amount of sodium as traditional salt.
The company currently has two products available through its B2C channel – shakers and SaltMe! Crisps. To grow this channel, MicroSalt has partnered with one of the largest wholesale distributors of health and speciality foods in North America, United Natural Foods, and one of the largest US distributors of organic and natural products, KeHE. MicroSalt also has an agreement in place to provide a low-sodium solution to US Salt LLC, a distributor of over 90 per cent of the private-label, round-can salt business in the US.
MicroSalt made a pre-tax loss of £2.5mn on revenue of £0.6mn in 2022, but it should scale rapidly with the benefit of the new investment. I have more than a passing interest in the IPO. That’s because the laggard in my 2022 Bargain Shares Portfolio, Aim investment company Tekcapital (TEK:13p), held a 97.2 per cent stake with a carrying value of $17.1mn (£14mn) in MicroSalt ahead of the IPO in addition to $1.4mn of convertible loan notes. Combined, the holdings accounted for 35 per cent of its net asset value of $53.1mn (24.5p) on 30 June 2023.
If MicroSalt whets investors’ appetite, then a decent re-rating of Tekcapital’s shares beckons. Buy.
■ Simon Thompson's latest book Successful Stock Picking Strategies and his previous book Stock Picking for Profit can be purchased online at www.ypdbooks.com at £16.95 each plus P&P of £3.75, or £25 plus P&P of £5.75 for both books.
