Shares digital

In the space of only a few days, two chemical firms have taken the plunge and joined the junior market. Plastics Capital (PLA:AIM), a specialist plastics products manufacturer, floated last week via four admissions spread over four days, having raised around £16.2 million.

The group, which had a market capitalisation of £26.9 million following the fourth admission, has grown through six acquisitions since 2002 and plans to continue expanding its key business organically and through further acquisitions.

Chairman, Faisal Rahmatallah, says the group expects to make two to three acquisitions a year and chose to join Aim to provide it with the capital to help reduce debt and strengthen its balance sheet. In addition, he says the flotation will help to raise the company’s profile.

Plastics Capital focuses on three key products – plastic bearings, creasing matrix and hose mandrels. Plastic bearings are used for rotation purposes in several applications, while the creasing matrix is used to crease cardboard automatically, and hose mandrels are used to make industrial rubber hoses.

The company has five factories in the UK, an assembly operation in Thailand and sales offices in the US and Japan. Around 70% of sales are exported to countries globally.

Last week also saw the flotation of FoaMasters (FOAM:AIM), which makes polyurethane flexible foam and related finishing products in the Asia Pacific region.

The group produces a variety of foams, including flame-retardant, memory, high-resilience, injection-moulded and environmentally friendly foams for industries such as bedding, footwear and furniture. Its customers include IKEA, Littlewoods, Nike, Adidas and Wal-Mart.

Upon admission, the group had raised around $5 million, but plans to raise further funds next year when the market will hopefully be more stable. However, deputy chief executive Richard Cheong says the group is in no hurry because it is already profitable and cash-generative.

Proceeds will be used to fund its expansion plans, helping the group to buy land and build plants to cater for demand from Europe, the US and China. FoaMasters operates six factories in China and a further two in Vietnam, with the ninth and tenth factory being established in Jiashan and Heshan in China, both of which are due to be operational by the end of the year.

Shares says: Early days but both groups have promising growth potential.