At first glance, joint ventures would seem positive. JVs are not just collaboration, they’re two companies creating a new entity.

Theoretically, synergy of two companies’ skills and experience should lead to a common goal being achieved. But this has not been reflected in the market.

Nine of 11 ASX small caps that have entered joint ventures have suffered share price declines.

Yet for the other two, FBR (ASX: FBR) and Genetic Technologies (ASX: GTG) it was a make or break moment for the companies, proving the market actually wanted their product.

After Caterpillar walked away from their partnership in December, FBR finally sealed a deal with Brickworks (ASX: BKW) in May. The pair formed a new company, Fastbrick Australia, and FBR will provide the technology while Brickworks will supply the bricks.

While shares have fallen slightly, they are still ahead of where they were before the deal was signed.

The other positive performer is Genetic Technologies (ASX: GTG). After months of wanting to combine its blockchain and health capabilities, it found a partner last December.

It combined with Blockshine Technology Corporation to form Blockshine Health. Genetic Technologies had a 49 per cent stake in the JV, investing $250,000.

Genetic Technologies CEO Paul Kasian said the new entity, Blockchain Health, “will leverage off GTG’s Biotech experience as well as BTC’s extensive development capabilities in the blockchain space”.

Not a solution?

While leveraging off different experiences sounds good in theory it evidently isn’t always so in practice. The remaining joint venture-forming small caps have been down since formation.

Southern Gold (ASX: SAU) has been held back by the harsh South Korean winter but began drilling in early April. Yet its joint venture did not stop the ASX enquiring about its cash flow problems after its most recent quarterly.

The company admitted it needed capital and was seeking to sell Australian assets as an option.

At first glance, Clean Teq (ASX: CLQ) appears to have gone well since it announced a JV last year. Earlier this year, it won a 20-year contract to construct and operate a water treatment plan in China, for a minimum of 9000 renminbi ($1882) per day.

But Clean Teq also operates a nickel-cobalt mine in New South Wales and in recent months these have been the worst performing minerals on global markets due to an oversupply.

Here’s a list of all JVs formed by ASX small cap companies in the last 12 months:

Code Company Price (27 May 3.30pm) JV Partner JV Name Effective Date % Return since JV official
GTG Genetic Technologies Ltd 0.008 Beijing Zishan Health Consultancy Ltd Unnamed 16.08.2018 -0.2
CT1 CCP Technologies Ltd 0.016 Koolmax Monitoring Technology Inc White Tiger Inc 30.08.2018 -0.11
SAU Southern Gold Ltd 0.125 Bluebird Merchant Ventures Ltd Unnamed 19.09.2018 -0.34
CLQ Clean TeQ Holdings Ltd 0.27 Ionic Industries Ltd Unnamed 24.09.2018 -0.44
HIP Hipo Resources Ltd 0.012 Crown Mining Sarl Unnamed 15.11.2018 -0.25
A3D Aurora Labs Ltd 0.375 WorleyParsons Ltd AdditiveNow 19.12.2018 -0.25
GTG Genetic Technologies Ltd 0.008 Blockshine Technology Corp Blockshine Health Corp 20.12.2018 0.33
IVQ Invitrocue Ltd 0.07 Private Investor InvivoCue Pte Ltd 11.02.2019 0
SHO SportsHero Ltd 0.061 Cross Bet Holdings Pty Ltd Pay-to-Play Australia Pty Ltd 07.03.2019 -0.21
TGP 360 Capital Group Ltd 0.975 Private Investor 360 Capital Digital Pty Ltd 01.05.2019 0.02
FBR FBR Ltd 0.082 Brickworks Ltd Fastbrick Australia Pty Ltd 06.05.2019 0.13