The two ASX shares in this article could be ideas for dividends.

Income is difficult to come by when it comes to assets other than ASX dividend shares because of how low the Reserve Bank of Australia (RBA) interest rate is.

Some businesses are rewarding investors quite handsomely each year with dividends or distributions from their profit.

These two ASX dividend shares could be ones to think about:

Accent Group Ltd (ASX: AX1)

Accent Group is one of the businesses that is seeing an enormous level of online sales growth, which is driving margins and profit higher.

Digital sales grew by 110% year on year to $108.1 million, this represented 22.3% of total sales. Total sales only went up by 6.6% to $541.3 million.

The gross profit margin improved by 140 basis points to 58.1%. The company said that inventory was clean with a strong in-stock position going into the second half of FY21.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) went up by 44% to $97.5 million and earnings before interest and tax (EBIT) grew by 47.3% to $81.8 million.

The bottom line grew even faster. Net profit after tax (NPAT) grew 57.3% to $52.8 million and earnings per share (EPS) rose 56.9% to 9.76 cents. It’s these profitability metrics that allow the board to declare stronger dividends.

The ASX dividend share decided to pay an interim dividend of 8 cents per share, representing a 52.4% increase.

In the first eight weeks of the second half of FY21 like for like sales were up 10.7%, with digital sales 65.4% higher than last year.

Using the dividend estimate on Commsec, at the current Accent share price it has a projected FY21 grossed up dividend yield of 7.5%.

Charter Hall Long WALE REIT (ASX: CLW)

This real estate investment trust (REIT) is one of the largest on the ASX. It’s run by property manager Charter Hall Group (ASX: CHC).

One the brokers that likes this ASX dividend share is Citi, which has a share price target of $5.30 for Charter Hall Long WALE REIT.

The idea of this REIT is that it owns a diversified property portfolio and has tenants on long-term leases. Some tenants include Telstra Corporation Ltd (ASX: TLS), Australian government entities, BP, Woolworths Group Ltd (ASX: WOW), Ingham’s Group Ltd (ASX: ING) and Coles Group Ltd (ASX: COL).

In the half-year result, Charter Hall Long WALE REIT said that it had a weighted average lease expiry (WALE) of 14.1 years.

After a number of acquisitions over the last year, it now has a portfolio worth around $4.5 billion, with more than half of the portfolio having triple net lease (NNN) exposure.

The ASX dividend share also recently announced that it had secured $500 million of long-term debt. The seven-year notes worth $300 million were priced at a fixed rate of 2.09% and the 10-year notes worth $200 million were priced at fixed rate of 2.79%. This increases the average debt maturity from 4.1 years to 5.2 years, with an weighted average cost of debt of 2.3%.

Citi thinks that the acquisitions will help earnings in FY21 and it’s expecting operating EPS of 29.3 cents. This translates to a forward distribution yield of 6.3% at the current Charter Hall Long WALE REIT share price.

More reading

• Leading brokers name 3 ASX dividend shares to buy
• 2 ASX dividend shares with 5% fully franked yields
• ASX fashion and beauty shares shine on half-year results
• Is the Accent (ASX:AX1) share price in the buy zone after today’s decline?
• Why Accent, Fortescue, Western Areas, & Zip shares are tumbling lower

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The PointsBet Holdings Ltd (ASX: PBH) share price will be one to watch on Tuesday.

This follows the release of an acquisition announcement by the sports betting company this morning.

What did PointsBet announce?

This morning PointsBet announced that its wholly owned Irish subsidiary, Lockspell Limited, has entered into a binding share purchase agreement to acquire Banach Technology. The transaction remains subject to customary completion conditions and is expected to close in April.

According to the release, PointsBet will acquire Banach Technology for US$43 million on a cash and debt free basis. This will be paid 55% in cash and the remainder in PointsBet scrip (1,752,875 shares).

In addition, the company intends to provide Banach Technology with US$4 million in funding to assist in the conversion process of existing equity options. However, this amount will be retained by PointsBet post completion of the transaction.

What is Banach Technology?

Banach Technology is a Dublin-based provider of proprietary risk management platforms and quantitative driven trading models. These platforms and models support complex pre-game and in-play betting products across numerous sports, including the four major American sports and international soccer.

The release explains that the Banach Technology team is deeply experienced, particularly in leading pre-game and in-play sports wagering markets. They previously established the Quants division of Paddy Power.

Management notes that the acquisition will position PointsBet as a leader of in-play sports wagering in the United States. This comes at an important time, as in-play wagering is expected to grow exponentially. In fact, within the next 3 years, it expects in-play wagering to represent ~75% of all sports wagering activity in the United States.

“Delighted”

PointsBet’s Group CEO and Managing Director, Sam Swanell, commented: “We are delighted with the acquisition of Banach and that its well credentialled team have agreed to join PointsBet. As legalisation to approve US sport betting accelerates across the US, it has become clear that the in-play opportunity will be very significant and those with the best depth and breadth of product will win.”

“Technology is at the forefront of everything we do at PointsBet and we have undertaken an in-house approach to proprietary technology as the key priority. In Banach we have found a like-minded team of technologists and the acquisition is a preferable approach to developing our in-play capabilities organically, given it allows us to dramatically ramp up our speed to market while still allowing us to own market leading technology and continue to control our destiny,” he added.

More reading

• Could this overnight news lift the PointsBet (ASX:PBH) share price?
• Pointsbet (ASX:PBH) share price loses 6%. Here’s why
• Growth outlook fails to save the Aristocrat share price today
• PointsBet (ASX:PBH) share price falls despite 174% revenue growth

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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I’m a big fan of buy and hold investing and believe it is the best strategy for generating wealth over the long term.

Legendary investor Warren Buffett is someone that uses this strategy and to great effect. And given the vast fortune he has amassed over the last six decades using this style of investing, it’s hard to argue against it.

But which shares would be good buy and hold options? Listed below are two ASX shares which could have the potential to provide investors with strong returns over the long term:

NEXTDC Ltd (ASX: NXT)

NEXTDC is a leading data centre-as-a-service provider. It owns a growing network of world class centres in key locations across Australia. While NEXTDC has been growing at a solid rate in recent years thanks to the shift to the cloud, its growth has gone up a gear over the last 12 months.

This is because the pandemic has led to the shift to the cloud accelerating and underpinned a significant increase in demand for capacity in its data centre. This has supported strong revenue and earnings growth.

Positively, the transition to the cloud still has a long way to go, which should support strong demand domestically throughout the 2020s. In addition, the company has recently opened offices in Singapore and Tokyo. If it expands into these markets, it could provide NEXTDC with a significant runway for growth.

UBS is positive on the company. It has a buy rating and $15.40 price target on its shares.

ResMed Inc. (ASX: RMD)

ResMed could be another great buy and hold option for investors. It is a medical device company with a focus on sleep treatment products. The company has been growing at a consistently strong rate over the last decade and, positively, looks well-placed to continue this form long into the future. 

This is due to its world-class, cloud-connected hardware and software solutions and its huge addressable market. Management currently estimates that there are 936 million people with sleep apnoea globally. And as the majority of these sufferers remain undiagnosed, it gives ResMed a significant runway for growth.

In addition to this, the company notes that there are 380 million people who suffer from chronic obstructive pulmonary disease (COPD) and over 340 million people living with asthma. That’s another 720 million people that could benefit from ResMed’s products.

Morgans is a fan of ResMed. It recently retained its add rating and put a price target of $30.09 on its shares.

More reading

• This fundie refuses to invest in gambling and fossil fuels
• 10 of the best ASX shares to buy in March
• 2 excellent ASX shares to buy and hold today
• 3 fantastic ASX growth shares to buy in March
• 2 fantastic ASX growth shares to buy this week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are a good number of options at the small end of the market for investors to choose from.

However, two small cap ASX shares that stand out from the crowd are listed below. Here’s what you need to know about them:

ELMO Software Ltd (ASX: ELO)

ELMO is a cloud-based human resources and payroll software platform company. The company’s increasingly popular platform streamlines a large number of important processes. This saves time and money for businesses.

Demand has remained strong for ELMO’s software over the last 12 months. This led to ELMO reporting annualised recurring revenue (ARR) of $74.2 million at the end of December. This was an increase of 42.8% over the prior corresponding period. This was driven by a combination of organic growth and the benefits of acquisitions.

Positively, this is still only scratching at the surface of its significant market opportunities in the ANZ and UK markets. In addition, the company’s jurisdiction agnostic platform gives it the option to expand into new markets in the future with relative ease.

One broker that is a fan of ELMO is Morgan Stanley. It currently has an overweight rating and $9.70 price target on its shares.

Nitro Software Ltd (ASX: NTO)

Nitro is a growing document productivity software company best-known for its Nitro Productivity Suite. This solution provides users with integrated PDF productivity and electronic signature tools via a software-as-a-service and desktop-based software solution.

The company has been experiencing strong demand for its products from some of the world’s biggest companies. This includes Barclays, CBRE, IBM, and Toyota.

This strong demand led to the company releasing a strong full year result last month. For the 12 months ended 31 December, the company reported ARR of $27.7 million. This was up 64% year on year and ahead of its upgraded guidance.

Positively, management is predicting more strong growth in FY 2021. It expects FY 2021 ARR to be in the range of $39 million to $42 million. This represents year on year growth of 41% to 51.6%.

Morgan Stanley is also positive on Nitro. It recently retained its overweight rating and lifted its price target to $3.70 price target.

More reading

• Leading brokers name 3 ASX shares to buy today
• ASX quarterly rebalance: HUB24 joins ASX 200, Brainchip into ASX 300
• ASX tech correction? 10 of the worst-hit shares
• ASX All Technology Index teetering on verge of a bear market
• 2 small cap ASX tech shares trading at a big discount

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia has recommended Elmo Software and Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Respected fund manager Wilson Asset Management (WAM) has recently identified two ASX shares that it owns in its portfolio.

WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Leaders Ltd (ASX: WLE).

There’s also one called WAM Active Limited (ASX: WAA) which looks at businesses it thinks are the most undervalued.  

WAM says WAM Active invests in market mispricing opportunities in the Australian market.  

The WAM Active portfolio has delivered gross returns (that’s before fees, expenses and taxes) of 12.1% per annum since inception in January 2008, which is superior to the Bloomberg AusBond Bank Bill Index return per annum of 3%.  

These are the two ASX shares that WAM outlined in its most recent monthly update:

Capitol Health Ltd (ASX: CAJ)

WAM explained that Capitol Health operates 63 community-based diagnostic imaging clinics, employing more than 800 staff and delivering more than 1.2 million procedures every year.

The healthcare business beat market expectations with its FY21 half-year result where revenue grew by 5.9% to $85.3 million. Operating earnings before interest, tax, depreciation and amortisation (EBITDA) rose 50.1% to $26.6 million.

Capitol Health also reported that its operating profit margin was 31.1%, up from 22% in the prior corresponding period. Statutory net profit after tax (NPAT) was $6.2 million – an increase of 131.6% year on year. The interim dividend was maintained at 0.5 cents per share.

WAM was pleased by the fact that the ASX share delivered “robust organic growth” despite having the majority of its business closed during the Melbourne lockdowns. Earnings benefited from a close control on costs.

The fund manager said that a broader rebound in industry demand is a catalyst for future earnings growth, while a stronger balance sheet allows Capital Health to execute earnings accretive acquisitions.  

Virgin Money UK CDI (ASX: VUK)

Virgin Money UK is one of the larger banks in the UK, after a merger between CYBG (Clydesdale and Yorkshire Banking Group) and Virgin Money UK. The aim was to gain enough scale to seriously challenge big banks like Barclays and HSBC.

It has a presence on the ASX because CYBG was spun out of National Australia Bank Ltd (ASX: NAB) a few years ago and retained a presence on the ASX.

Virgin Money has 6.4 million customers, which the company helps through its online personal, mortgage and business banking services.

Last month, the UK bank said that it was making a good start to the year with its continued roll-out of its rebranding programme, a return to making a profit in statutory terms and high levels of customer deposits – the quarter ending 31 December 2020 showed growth of 0.9%.

WAM pointed out that Virgin Money’s level of active payment holidays declined across the portfolio. This is like how Australian borrowers were able to get deferrals on their loans from banks like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ) and NAB due to the impacts of the pandemic on their finances.

The fund manager is positive about Virgin Money UK’s outlook because the UK’s vaccination program and helpful fiscal and monetary policies that may support the company’s rebound from the COVID-19 pandemic.

More reading

• Wilson Asset Management (WAM) thinks these 2 ASX shares are a buy
• These were the best performing ASX 200 shares in February

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Are you looking for some top ASX dividend shares to add to your income portfolio? 

Then you might want to take a look at the ASX dividend shares named below. Here’s what you need to know about them:

BWP Trust (ASX: BWP)

BWP Trust could be an ASX dividend share to look at right now. The commercial property company is the largest owner of Bunnings Warehouse sites across Australia. At the last count, it owned a total of 68 properties which were leased to the home improvement giant.

With demand for home improvement products growing strongly and government stimulus supporting the industry, Bunnings has proven to a fantastic tenant for BWP. It has enjoyed high occupancy rates and been able to collect its rent as normal this year.

As a result, for the first half of FY 2021 BWP”s profit (including property revaluation gains) rose 6% over the prior corresponding period to $144 million.

This allowed management to reaffirm its plans to pay a full year distribution of ~18.3 cents per share. Based on the current BWP share price, this equates to a generous 4.6% dividend yield.

Rural Funds Group (ASX: RFF)

Another ASX dividend share to look at is Rural Funds. It is another owner of commercial property. However, as its name implies, it targets a very different side of the market. 

Rural Funds owns a $1.1 billion portfolio of diversified agricultural assets, including almond and macadamia orchards, premium vineyards, water entitlements, cattle and cropping assets. These are all leased to high quality and experienced tenants.

At the end of the first half, Rural Funds had a very long weighted average lease expiry (WALE) of 11.1 years. This, combined with built in rental increases, means the company is well-placed to grow its distribution by its target of 4% per annum over the long term.

In FY 2021 Rural Funds intends to pay a 11.28 cents per share distribution and then an 11.73 cents per share distribution next year. Based on the current Rural Funds share price, this equates to 4.7% and 4.9% yields.

More reading

• 2 ASX dividend shares with very generous yields
• Is Australia’s stagnant wage growth worse than we thought?
• 2 top ASX dividend shares with generous yields to buy
• 2 ASX dividend shares with yields above 5%
• 2 reliable ASX dividend shares to buy in March

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week with the smallest of gains. The benchmark index rose less than 0.1% to 6,773 points.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to rise

It looks like it could be a similarly subdued day for the Australian share market on Tuesday. According to the latest SPI futures, the ASX 200 is poised to open the day 5 points higher this morning. This follows a positive start to the week on Wall Street, which in late trade sees the Dow Jones up 0.1%, the S&P 500 up 0.2%, and the Nasdaq trading 0.6% higher.

Tech shares to rebound

Afterpay Ltd (ASX: APT), Xero Limited (ASX: XRO), and other ASX tech shares could have a better day on Tuesday after their US counterparts climbed higher overnight. In late trade the tech-focused Nasdaq index is up 0.6% and outperforming the rest of the US market. Given how the local tech sector tends to follow the Nasdaq’s lead, this could mean a positive day lies ahead. Investors were buying tech stocks after bond yields eased.

Oil prices fall

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could trade lower today after oil prices pulled back. According to Bloomberg, the WTI crude oil price is down 0.5% to US$65.27 a barrel and the Brent crude oil price has fallen 0.6% to US$68.78 a barrel. Traders were selling oil despite the improving global economic outlook.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a positive day after the gold price pushed higher. According to CNBC, the spot gold price is up 0.4% to US$1,727.00 an ounce. Easing bond yields were behind the precious metal’s gain.

Metcash strategy update

The Metcash Limited (ASX: MTS) share price will be on watch on Tuesday when it holds its eagerly anticipated strategy day. Goldman Sachs recently commented: “MTS is hosting a strategy day on the 16th of March. We expect to hear more about progress beyond mFuture and MTS’ foray into omni-channel retailing at this stage. We expect this roadmap to potentially be a strong catalyst for MTS in the near term.”

More reading

• Why did the Afterpay (ASX:APT) share price and 2 other BNPLs fall today?
• ASX 200 recovers, Evolution Mining acquisition, Afterpay sinks
• Two ASX recovery shares with room to run higher
• 2 ASX 200 shares to buy for income
• Why the Hub24 (ASX:HUB) share price is firing up 12% today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re looking to boost your portfolio with some growth shares, then you might want to look at the ones listed below.

Here’s why these quality ASX growth shares have been tipped as ones to buy right now:

Bigtincan Holdings Ltd (ASX: BTH)

The first ASX growth share to look at is Bigtincan. It provides an artificial intelligence-powered sales enablement automation platform that is used by companies around the world. This includes 7 of the top 10 companies on the Fortune 500.

Bigtincan recently released its half year results and reported annualised recurring revenue (ARR) of $48.4 million. This was a 50% increase over the prior corresponding period. It was driven by organic growth and the benefits of acquisitions.

Pleasingly, the company has the balance sheet strength to continue making earnings accretive acquisitions in the future. At the end of the first half, Bigtincan had a cash balance of $65 million.

One broker that is positive on the company is Ord Minnett. Its analysts were pleased with its first half performance and believe Bigtincan has a long runway for growth in a large addressable market.

Ord Minnett currently has a buy rating and $1.08 price target on its shares.

IDP Education Ltd (ASX: IEL)

Another ASX growth share to look at is this provider of international student placement and English language testing services.

Unsurprisingly, the last 12 months have been very tough for IDP Education. This was evident in the company’s first half results. For the six months ended 31 December, the company posted a 29% decline in revenue to $269 million and a 46% decline in EBIT to $47.3 million.

However, the good news is that trading conditions are improving as vaccines are rolled out across the world. In addition to this, the company has fared much better than its rivals, putting it in a strong position to win a greater share of the market when the pandemic passes.

Late last week analysts at Morgan Stanley put an overweight rating and $30.00 price target on the company’s shares. The broker is expecting a big rebound in its earnings in FY 2022.

More reading

• 2 ASX shares rated as buys by many brokers
• Here’s why the IDP Education (ASX:IEL) share price sank 6% today
• ASX tech correction? 10 of the worst-hit shares
• ASX All Technology Index teetering on verge of a bear market
• The worst performing ASX 200 shares last week

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. The Motley Fool Australia has recommended BIGTINCAN FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The 2021 KPMG Risks and Opportunities for Mining Report has dropped and in it is a picture of the mining industries’ future, particularly the importance of ESG strategies.

The annual report surveys mining executives from all over the globe to understand how the industry stands.

Let’s take a closer look at what is concerning and exciting one of Australia’s biggest industries in 2021.

12 months of challenges  

While plenty has changed since the beginning of 2020, mining companies’ main concern remains the same: Commodity price risk.

Also concerning industry leaders were economic downturns, a mainstay of 2020, and unsurprisingly, global pandemics.

An earlier report by KPMG, Australian Mining Risk Forecast 2021/21, commended Australian mining companies on their quick actions to protect themselves and their workers from COVID-19.

Further, the report found through the pandemic, consumers returned to invest in historically stable commodities, while government stimulus packages kept mining companies in the green. These combined measures kept commodity prices considerably stable.

Interestingly, companies with large capitalisations viewed economic uncertainty and environmental risks as greater issues than fluctuating commodity prices.

The risks of supply chain bottlenecks were also highlighted during COVID-19, with the report stating the industry is moving to address them.

Perhaps as a reflection on travel restrictions, mining executives now see access to key talent as the ninth biggest risk factor to their organisations.

ESG’s are bringing an ethical future to mining

The report found the future of mining is being heralded optimistically. Australian mining companies have already embraced measures deemed by KPMG’s report to be essential to the future of mining. Those being strong Environmental, Social and Governance (ESG) measures.

Executives surveyed almost unanimously agreed companies need to have a clear, measurable ESG strategy to be successful. In fact, 83% of those surveyed said success must be measured against the results of a company’s ESG strategy. 

There is a belief among mining executives that the future of mining will begin soon. With decarbonising efforts underway and a focus on green energy, there will likely be a heightened demand for raw materials to create sustainable energy.

Also, as an effect of COVID-19, the industry’s workplace health and safety have been boosted. Particularly mental health care.

The future of mining is ESG

This year, miners are more likely to agree that innovation in the sector won’t see job losses. In fact, 82% view technology’s advancement as an opportunity instead of a threat.

Within the adoption of technology comes an element of social responsibility – it’s imperative to keep jobs local and benefit mining communities.

KPMG has observed a trend in Australia, where technology is adopted faster than in North America. Perhaps this is a reflection of the diverse nature of Australia’s mining sector.

Currently, most mining executives believe modern mining companies need to embrace new business models, such as strategic partnerships, private equity funding and Public-Private Partnerships.  Nearly two-thirds state the mining industry needs to consolidate to manage costs and risks.

Despite 2020’s unique challenges, Australia’s mining industry is standing strong and looks to be set for a prosperous future.

Three mining companies with exceptional ESG strategies 

Neometals Ltd (ASX: NMT) 

A lithium mining company working towards batteries for electric vehicles and the storage of clean energy. It has also partnered with German plant manufacturer SMS group to create Primobius, a lithium-ion battery recycling program. Neometals commits to its strong focus on sustainable corporate governance and community partnerships by supporting local businesses, charities and projects.

Vulcan Energy Resources Ltd (ASX: VUL)

Vulcan is working to decarbonise the lithium-ion battery industry with its zero-carbon lithium product.

Euro Manganese Inc (ASX: EMN)

Euro Manganese stands by a code of ethics and business conduct established in 2017. The code stipulates the company must create as little environmental impact as possible and contribute to local communities to enhance them and practice good corporate governance. The company is a miner of manganese in Europe, which it supplies to the lithium-ion battery industry.   

More reading

• Vulcan Energy (ASX: VUL) share price up as revenue soars over 1,000%
• Why the Vulcan Energy (ASX:VUL) share price is jumping 12% today
• Neometals (ASX:NMT) share price unfazed by battery recycling agreement
• Future proofing: Should you invest in a sustainable ASX portfolio?
• The Vulcan Energy (ASX:VUL) share price has fallen 17% in 2 weeks

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Anyone who has an interest in the US share market, and in US growth shares, in particular, is probably familiar with the concept of a SPAC (Special Purpose Acquisition Vehicle) company.

SPACs have been growing in popularity over the past year or two. They have also been singled out as a symptom of what some investors call an overheating market.

So what exactly is a SPAC, and are they coming to the ASX?

A SPACtacular idea?

A SPAC is a way that an unlisted company can join the share market. Think of a SPAC as an alternative to an initial public offering (IPO).

However, unlike an IPO, which involves the unilateral listing of a new company’s shares, SPACs operate a little differently. They involve a shell company, that exists only for the purposes of the SPAC.

If all parties agree, this shell company merges with an unlisted private company in order to form a new company on the share market. Many speculative investors like to hunt for these shell companies before an official announcement is made.

That’s because a SPAC has very little value before an announced merger. And potentially a lot once the merger is announced.

Some famous examples of companies that have listed using a SPAC include Nikola Corporation (NASDAQ: NKLA) and Draftkings Inc (NASDAQ: DKNG).

SPAC that, right on the ASX floor?

At least until now, SPACs have been an American phenomenon. But it might be about to be coming to a whole lot closer to home for Aussie investors. According to reporting in the Australian Financial Review (AFR) today, the ASX is facing a growing chorus of supporters clamouring for SPACs to be allowed on our own ASX.

Especially given that some companies that might have listed on the ASX could instead look to the US for a SPAC merger.

The AFR reports that Ian Taylor, head of equity capital markets at Goldman Sachs in Sydney, is one such voice. He told the AFR that they can be an efficient and useful way for companies to join a share market.

“There are real uncovered gems at very large sizes… the SPAC structure is evolving for the better and I do think that fears of a bubble are overdone,” he told the AFR.

However, the ASX will certainly be wary of the frothiness the whole SPAC space has seen in recent times. The AFR report also states that SPACs raised US$78 billion from investors in 2020, but has already raised another US$72 billion in the 2½ months of 2021 so far.

The US Securities and Exchange Commission (SEC) was reportedly forced to issue an alert to retail investors last week. It warned them that celebrity like Jay-Z backing a SPAC is not a reason to invest. Not exactly a problem the ASX would want, you would think.

The ASX is reportedly considering the idea. The AFR tells us that the ASX has stated that, “we will listen to the market and take a cautious approach”.

That doesn’t sound like a ringing endorsement of the whole process, but this is certainly an interesting space to watch!

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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