‘The ASX has never seen anything like this’: billionaire pays 5x premium for Purifloh stake
It was one of the most unexpected stockmarket investments of the year: microcap air purifier Purifloh sold a chunk of itself to a US billionaire at almost five times its share price.
American businessman Bill Parfet this week paid $9.6 million for 4 million Purifloh shares at $2.40 a pop.
The stock (ASX:PO3) was fetching 50c at the start of the week.
Purifloh — which has no revenue – has technology that it is planning to roll out in three main fields – air purification, water sanitation and medical sterilisation.
It is also known for developing a mailbox-sized air purifier that eliminates tobbaco smoke and kills airborne diseases like Anthrax.
Open-mouthed investors threw more than $700,000 at the stock on Wednesday, pushing the price up to $2.17 — a 334 per cent jump. It closed at $2.15 on Thursday.
“Well I’ve been trading for 40 years and never seen anything like it before,” said one investor on the Hot Copper forum.
Neither had Purifloh Director Simon Lill.
“The market was clearly caught by surprise,” Mr Lill told Stockhead. “I’m not sure the ASX has ever seen anything like this before. It is a testament to the strength of our technology.”
In addition to the placement, Mr Parfet bought another 1.3 million shares in an off-market transfer from Purifloh’s second biggest shareholder for a total of 5.3m shares or about 17 per cent of the company. He will also join the Purifloh board.
Of the $9.6m in funds recieved however, Purifloh will need to pay a 3pc introductory fee to an independent party not related to the company’s technology partner, Somnio, for the introduction to Mr Parfet.
Somnio, a research and innovation company, is based in Detroit, Michigan, and Mr Parfet told ASX investors that he had been interested in its technology for some time.
“We have conducted due diligence on Somnio and its range of technologies for some time and we are impressed with the disruptive nature of the FRG technology platform,” he said.
“An investment into Purifloh to execute on its potential was logical. That the technology has been developed in Michigan and has global impact only adds to our attention.”
Why pay a 380 per cent premium? Several potential reasons.
A recent research report from Beer & Co. valued the stock at $5.10, a 920 per cent premium to Tuesday’s closing price of 50c.
The company also doesn’t have a great deal of shares on issue — just 27.29 million, in fact.
And of those on issue, the stock is quite tightly held — prior to this investment, the majority shareholder, Dilato Holdings, controlled 67 per cent of the stock.
Mr Parfet, 71, is said to be a billionaire with a long corporate history. For 30 years, he worked for a pharmaceutical company called Upjohn that was founded by his great-grandfather.
Upjohn later became Pharmacia & Upjohn, and had ties with Monsanto, before being acquired by big pharma giant Pfizer in 2003.
In the meantime, the $9.6 million cash injection will help commercialise Purifloh’s Free Radical Generator (FRG) air and water purification technology.