Abaxx Technologies Inc. ABXX-NE has raised $30.7-million from a group of institutional investors including BlackRock Inc. and Wellington Management Co., moving the company closer to launching a futures market aimed at meeting the needs of the global transition to low-carbon energy.
Toronto-based Abaxx, which counts mining financier Robert Friedland among its backers, is planning for its trading operations to begin early next year in Singapore. Initially, it will offer futures contracts for liquefied natural gas, carbon offsets and nickel sulphate, a material used in the manufacture of batteries.
The money raised secures the capital required by regulators, and enables Abaxx to launch as an approved clearinghouse, Josh Crumb, the company’s chief executive officer, said in an interview. Some of the proceeds will also go to working capital.
Mr. Crumb noted Abaxx was able to attract the capital from some of the world’s largest asset managers despite difficult market conditions. He chalked that up to the strategy of targeting commodities specifically geared to the lower-carbon economy, rather than offering them alongside other materials such as crude oil and standard metals as other exchanges do.
“The fact that we’re dedicated to energy-transition commodities is really what got them across the line.”
The company issued 5.34 million common shares at $5.75 each in a non-brokered private placement. Other investors include Canoe Financial of Calgary and Toronto-based hedge fund K2 & Associates.
In September, the company made headlines when former Goldman Sachs Group Inc. commodities chief Jeff Currie signed on as a non-executive director. Over three decades at the U.S. investment bank, Mr. Currie became known for aggressive forecasts, including predicting the commodities supercycle in the first decade of this century. He now sees a similar trend ahead for materials needed in the shift to a low-carbon economy.
The Abaxx exchange is aimed at giving project developers the price certainty necessary for the trillions of dollars in infrastructure needed to achieve the global goal of net-zero greenhouse gas emissions by 2050. Mr. Crumb has said he envisions miners selling nickel contracts on the exchange, for example, and automakers buying them to reduce price risks in their supply before speculators jump in to begin trading and arbitraging, as they do in today’s major futures exchanges.
Trading in nickel sulphate, LNG and voluntary carbon offsets is slated to begin in the first quarter of 2024
Mr. Crumb said the addition of some of the world’s largest institutional investors as backers is giving prospective traders in the commodities more comfort as the launch gets nearer.
“The is the problem with starting a new market. Everyone wants to sit around and watch. This is catalyzing people to get more active,” he said.
Jeffrey Jones