At the time of writing, the Novonix share price is trading at $2.36, up 11.8%.
Novonix share price higher on potential dual listing
Novonix has submitted a draft registration statement to the US Securities and Exchange Commission (SEC) for the potential initial public offering (IPO) of American Depository Shares (ADS) and concurrent listing of ADSs on the Nasdaq.
The company advises that the number of ADSs offered and underlying Novonix ordinary shares to be issued have yet to be determined. The price for such instruments and the timing of the offering are also undecided at this stage.
The prospect of a dual listing is currently subject to factors including the SEC review process, market conditions, investor demand and shareholder approval.
Why seek a dual listing?
Companies seek to list on more than one exchange primarily for the opportunity to raise more capital. In the case of many ASX shares, listing in the US means access to the world’s largest economy and a deep pool of investors.
This would make sense for Novonix, as a highly prospective but loss-making battery producer. The company is developing a cathode manufacturing method expected to represent approximately 30% of the cost of a battery cell.
Novonix is currently expanding its staff and scope while beginning expansion plans for the next phase of pilot synthesis capability for larger volumes.
To fund its development and commercialisation plans, the company successfully raised $115 million on 25 February. The proceeds of the funds will be used to increase the scale of its anode material production up to 10,000tpa. The company believes that at 2,000tpa of anode, it will be able to secure multi-year contracts and generate healthy free cash flow to support growth.
Despite its disruptive technologies and aspirational growth, there are still significant capital outlays needed to complete research milestones and expand manufacturing capabilities. In the first half of FY21, the company reported a net loss of $10.7 million.
From a funding perspective, a dual listing does make sense. And investors appear to be pleased with the announcement, judging by today’s Novonix share price increase of almost 12%, at the time of writing.
Should the dual listing be successful, Novonix will join its lithium peer, Piedmont Lithium Inc (ASX: PLL) on the Nasdaq.