The rate for to buy the US dollar by the public in Jamaica’s foreign currency market, dropped by 22 Jamaican cents on Monday, as inflows into the market exceeding outflows by US$8 million.
On Monday at midday dealers purchased US$19.60 million at an average rate of J$125.20 while they only sold US$15.74 million at an average of J$125.73.
At mid-day on Friday dealers purchased US$7.7 million at an average rate of J$125.24 while they sold US$6.96 million at an average of J$125.98.
On Monday, the rate of exchange to buy the US dollar by the public, declined for the fifth consecutive day to end at $125.76, as dealers sold US$48.69 million in US dollars, compared to US$30.35 million at an average rate of $125.98 on Friday. US currency purchases amounted to US$56.75 million on Monday, at an average rate of $124.94, compared to Friday, with US$30.77 million at $124.73.
Dealers’ purchased US$61.32 million, versus US$34.27 million on Friday in all currencies in Jamaica’s Forex market and sold just US$50.73 million compared with US$32.6 million sold, previously.
The selling rate for the Canadian dollar dropped to J$96.77 from J$98.60 at the close on Friday. The selling rate for the British Pound slipped to J$168.62 versus J$169.10 previously and the euro gained value against the Jamaican dollar, moving to J$149.90 to buy the European common currency, versus prior selling rate of J$150.96.
It cost J$125.76 for one US dollar
Over 1,000 applicants push FosRich IPO over
Stocks and Securities advised the Jamaica Stock Exchange that the “Invitation for Subscription” in the Initial Public Offering for FosRich Company Limited is “Now Oversubscribed and Closed”. The Offer closed at 9:01 am today after its official opening this morning.
Reports reaching IC Insider.com is that applications for the issue exceeds 1,000, with more than $350 million accounted for so far, with the full amount still be counted up to late Monday evening.
The company went to market to raise $200 million from sale of just over 100 million shares at $2 each. The general public were allocated just 10,070,111 units, Stocks and Securities, brokers for the IPO was allocated 50 million units and key partners and staff shares has 40,385,000 allocated to them. At this stage it is unknown if any shares from the reserves allocations were not taken up and therefore became available to boost the minuscule amount allocated for the general public. If the general pool is not boosted by much than the general public will end up only a very small sum.
FosRich is one of five IPO issues coming to market in December as VM Investments announced their issue and released the prospectus to sell 300 million shares up to $2.45 each and Elite Diagnostics is expected to issue their prospectus this week, while Wisynco and GWest both officially opens for subscription this week.
300M IPO VM Investments shares next week
VM Investments Limited, the immediate parent company of VM Wealth Management (VMWM), will offer just over 300 million shares for sale, on Monday December 11 at $2.45 per share, to raise $689 million.
A total of 225,003,750 Ordinary Shares in the Offer are initially reserved for staff and customers of the VMBS Group, discounted at $2.08 to $2.33 each, and 75 million for the general public, at $2.45 each.
The offer which opens on December 11 is scheduled to close on December 18. It is the intention to list the company on the main market of the Jamaica Stock Exchange, after the issue closes.
The company intents to use the proceeds to build its capital base, to enable it to provide financing solutions and to capitalize on new business opportunities. In this regard the CEO Devon Barrett stated that they intend to allocate $1 billion per year to meet the needs of the small business sector, where data shows that there is an annual demand for $20 billion in financing.
The Directors expect to distribute up to 75 percent of the after-tax earnings as cash dividends, up from 55 percent on average to date.
Over the last five years, the revenue stream has evolved from predominantly, fixed income and securities trading, with approximately 70 percent of its total revenues coming from net interest income. Since 2011, VM Wealth has diversified its revenue streams, becoming active in the asset management and capital market space, with a comprehensive range of products and services. This has resulted in VM Wealth earning approximately 70 percent of its revenue from non-interest income sources.
The company reported after taxes profit of $326 million, surpassing $310 million in 2015. Up to September this year, profit of $273 million was achieved, putting in on track for $360 for the year or 30 cents per share. VMWM’s total operating revenue for 2016 was $1.28 billion, down from $1.37 billion in 2015. To September this year, $1.1 billion in revenue was generated. Revenues in 2016, comprised mainly of Net Interest Income of $251 million, gain from investment activities of $279 million and net fees and commissions of $280 million. Up to September, Net Interest Income came in at $191 million, gain from investment activities of $171 million and net fees and commissions of $370 million.
Shareholders’ equity stands at $2.12 billion as of September this year, with 1.2 billion shares issued and assets that include mostly investment securities. Third party assets under management increased by $4.4 billion or 55 percent, from $8 billion in 2015 to $15 billion in 2016 and assets under custodian arrangements amounts to $23 billion up from $20 billion in 2015. This was due mainly to increased promotion and the introduction of new unit trust product with 6 new portfolios – three US$ bond portfolios, one J$ bond portfolio, one local equities portfolio and a real estate portfolio.
The strong growth in net fees and commissions is very appealing as it will provide the base for good consistent growth in revenues and profits going forward.
DEVON BARRETT, MBA, is the Group Chief Investment Officer & Chief Executive Officer, Victoria Mutual Wealth Management.
With the 1.2 billion shares now in issue earnings per share is 30 cents for 2017 giving it a PE of 8. At a price of $2.45 and a PE of just 8 times 2017 earnings, the stock is price to enjoy a decent bounce ahead of 2018 earnings that should be higher than that of the current year’s, making it even more attractive.
The nature of the earnings can result in higher or lower profit from year to year but the longer term trend ought to be up, all things being equal especially as the more predictable fee income is growing at a faster pace that the others.
VM Investments IPO December 11
The Initial Public Offer of shares in VM Investments Limited the immediate parent company of VM Wealth Management (VMWM) will open on Monday December 11 and is priced at $2.45 per share.
The annual report of Victoria Building Society stated that 2016 turned out to be another record breaking year for VM Wealth Management, as net profits after taxes of $326 million surpassed the previous record of $310 million in 2015. VMWM’s total operating revenue was $808 million, virtually the same as in the previous year. Revenues comprised mainly of Net Interest Income of $248 million, gain from investment activities of $279 million and net fees and commissions of $280 million. Third party assets under management increased by $4.4 billion or 55 percent, from $8 billion in 2015 to $12.4 billion in 2016. This was due mainly to increased promotion and the introduction of our new unit trust product with 6 new portfolios – three US$ bond portfolios, one J$ bond portfolio, one local equities portfolio and a real estate portfolio.
DEVON BARRETT, MBA, is the Group Chief Investment Officer & Chief Executive Officer, Victoria Mutual Wealth Management.
The VM Investments issue is adding to a very busy December, for IPOs and this is likely to be followed January with another busy slate of Initial Public Offerings. Planned issues by Mayberry Investments that were expected in December, may be put off until January, IC Insider.com has been informed. Sygnus Capital Investments is the other that could be listed in January.
More gains for Jamaican$
Jamaica’s foreign currency market activity returned to normal on Friday with trading at midday showing buying and selling almost even, unlike the previous two days when selling was well below buying. On Friday at midday, dealers purchased US$7.7 million at an average rate of J$125.24 and sold US$6.96 million at an average of J$125.98.
At mid-day on Thursday dealers purchased US$15.39 million at an average rate of J$125.49 while selling US$7.72 million at an average of J$126.05.
On Friday, the rate of exchange to buy the US dollar by the public, declined for the fourth time for the week to $125.98 as dealers sold US$30.35 million in US dollars, compared to US$38.51 million at an average rate of $126.08 on Thursday.
US currency purchases amounted to US$30.77 million on Friday, at an average rate of $124.73, compared to Thursday, with US$32.67 million at $125.
Dealers’ purchased US$34.27 million, versus US$42.48 million on Thursday in all currencies in Jamaica’s Forex market and sold just US$32.6 million compared with US$46.15 million sold, previously.
The selling rate for the Canadian dollar jumped to J$98.60 from J$95.16 at the close on Thursday. The selling rate for the British Pound slipped to J$169.10 versus J$169.72 previously and the euro gained value against the Jamaican dollar, moving to J$150.96 to buy the European common currency, versus prior selling rate of J$148.55.
NCB Buying 50.1% of Bermudan bank
NCB Financial Group today announced the acquisition of majority shares in the Clarien Group, a Bermudan based financial group in which Portland Private Equity holds 17.92 percent interest.
Edmund Gibbons Ltd with retain 31.98 percent of the shares. The transaction has received approval from Bank of Jamaica and the Bermuda Monetary Authority provided a no objection letter, the release from NCB states but final approval is subject to the Ministry of Finance. James Gibbons a director of the group expresses the view that the linkage will enable expansion of their offering locally and globally.
In 2016, Portland Private Equity pumped in B$$12.6 million into Clarien to meet capital needs based on tighter regulatory capital requirements as well as a swelling bad debt position amounting to 14 percent of their loan portfolio. The bank is said to have made B$$500,000 profit in 2015.
According The Royal Gazette, Clarien said its loan portfolio had shrunk by $66.8 million in 2015 to $809.7 million by the end of the year. This was attributed to a trend of borrowers paying down mortgage debt.
Clarien has more than eight decades of banking history in Bermuda and is said to be the largest bank in the country.
NCB recently raised US$250 million on the local market for regional expansion, this acquisition seems to be one that was on their radar when the funds were being raised, but based on the amount Portland injected the acquisition by NCB could cost around US$40-50 million, a mere dent in the amount they raised in the summer of 2017, but with earnings of $500,000 in 2015, unless profits picked up considerably since, which seems unlikely with the acquisition by NCB, the amount paid is most likely considerably far less.
For the fiscal year to September NCB made profit of J$19.1 billion or US$146 million up from J$14.45 billion in 2016. Gross revenues for 2017 fiscal year amounted to J$75.7 billion.