Minority owners disrupt NCB’s Guardian offer

NCB Financial Group has advised that the offer to acquire up to 62 percent of Guardian Holdings shares lapsed due to failure for condition 2.4.5 of the Offer.
The conditions in summary stipulates that the conclusion of the offer is subject to there being no action instituted or threatened or investigation by government or its bodies or legal action that may delay the completion of the offer or make it illegal.
At the end of Friday 23rd February, there are terms and conditions of the Offer which remain outstanding a release from NCB stated, as such and in accordance with the provisions of the Securities Industry (Take-Over) By-Laws, 2005 the Offer lapsed.
The latest tally of offers received showed 535 Guardian shareholders tendered approximately 91,743,975 shares which, together with the NCB existing shareholding, represents approximately 70.24% of the outstanding GHL Shares. No shares deposited have been taken up by the Offeror.
NCB future states that the Trinidad and Tobago Securities and Exchange Commission has decided to convene a hearing in accordance with the provisions of the Securities Act, 2012 in respect of the facts and circumstances surrounding the Offeror’s equity interest in GHL and the issuance of the Offer Circular.

Treasury bill rates plummet

Interest rates on Government of Jamaica Treasury bills reached their lowest levels in decades with the latest round of treasury bills falling sharply as $9.1 billion dollars chased after the limited amount of $1.8 billion on offer in three tranches.
The 91 day bills cleared at an average of 3.35 percent, down from 3.99 in January, the 182 days instrument ended at 3.593 percent, a fall from 4.16 percent from the average rate in January and the 9 months bill closed at an average of 4 percent. The sharp fall comes against the background of zero inflation rate in January and with no planned tax increase ahead the next few months could continue to see very low inflation.
The decline has implications for a wide array of developments in the wider economy and should herald a general fall in interest rates across the board over the coming months. Rates look as if they will fall further to around 3 percent where they could settle for some time.

Elite IPO put off for now

The initial public offer of 71 million shares in Elite Diagnostic that was to have opened to the public on Monday January 22 but put back to Wednesday January 24 has been put off once again.
The prospectus that was originally planned for release in early December included results for the first quarter of the current fiscal year to September with errors that lead to an understating of expenses and over stating of profit as well as errors in the amounts relating to fixed assets in the cash flow and balance sheet.
According to a recent release from the company, “Elite, after consulting with its Financial Advisors, has decided to update certain statements made in its prospectus dated December 11, 2017 and Addendum dated January 17, 2018. The revised statements and the new Opening and Closing Dates will be published on the JSE’s website as soon as possible.”
IC Insider.com who first brought the errors in the report to the public had written after the addendum was released that the company needed to withdraw the prospectus and have the figures properly checked and audited before releasing it again to the public.

Bank of Jamaica chops interest rate

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Falling interest rates

Interest rates on the Bank of Jamaica overnight policy rate was slashed by 7.7 percent effective 18 January 2018. The policy interest rate which is offered on overnight placements with the Bank will be reduced to 3 percent from 3.25 percent.
According to the country’s central bank, “this adjustment reflects the Bank’s assessment that inflation for the next eight quarters should remain within the target of 4 percent to 6 percent but the risks to the projections are skewed to the downside. One of the key risks highlighted by recent data is that, even as the economy continues to expand, growth has been weaker than anticipated. The outlook for inflation continues to reflect the expectation that the Government will continue the high standard of fiscal management outlined in the fiscal rules.”
“Inflation picked up slightly in recent months, largely driven by higher agricultural food prices and electricity costs caused by the recent heavy rains and increases in international oil prices. However, the inflationary impact of the heavy rains on agricultural food prices should be reversed over the coming quarters.”
“The Bank’s decision to ease monetary policy supports continued credit expansion and faster economic growth. International reserves are growing, inflation expectations remain broadly anchored around the Bank’s target, the current account of the balance of payments is projected to remain at sustainable levels, market interest rates are declining and the fiscal accounts continue to perform strongly.”
Investors in fixed assets such as real estate and equity investments should take note as it could mean a lift in the value of those assets class.

Party leads to chaos on airport road

Hundred of Jamaicans and other travelers scheduled to depart Norman Manley airport on New year’s day, missed their flights, having been caught in a huge traffic jam for more than five hours tonight on their way to the airport.
One passenger who missed their flight that was scheduled to leave at 8 PM, due to the chaotic situation, was still on the road going towards he airport at 11.15 PM and was some distance from it, having left Kingston from 6 o’clock in the evening.
“There are four lanes of traffic going to the airport and one going to Harbour View,” the passenger reported.
This is happening on a road that normally has just two official lanes.
Closer to the airport one report is that there are five lanes of traffic trying to leave from the airport. Reports are that there are few police on the scene regulating traffic and that the evidence of the pile up started from as far back from 4 PM.
The problem was due to a party that was held in the area  that apparently attracted scores of patrons with inadequate policing by the security forces and traffic piling up well beyond the airport on the Port Royal Road.

GWest Oversubscribed

GWest complex in Montego Bay,

The Initial Public Offering of 170 million shares by Gwest Corporation is oversubscribed with the offer closed at 4:30 pm on Thursday, December 7, the broker JMMB Securities advised the Jamaica Stock Exchange.
The offer was for 169.7 million shares at $2.50 each. The offer opened on December 7 and was scheduled to close on December 21.
GWest offer included 36,000,000 Shares reserved for the lead broker, JMMB Securities or its clients, 64,000,000 Shares were reserved for Jamaica Money Market Brokers’ Pension and Client Funds Investment Management Unit, 19,400,000 Shares for GWest clients and suppliers and 600,000 Shares for independent directors, the Mentor and employees of the Company and 69.7 million shares for the general public.
Word reaching IC Insider.com is that the offer for Wisynco Group has so far attracted around $18 billion in subscriptions but the principals want to have the widest distribution of shareholders possible, hence the continuing opening of the issue.
The GWest shares will be listed on the Junior Market of the Jamaica Stock Exchange.

NCB Group goes for 62% of Guardian

NCB set to increase shares in Guardian Holdings.

NCB Financial Group announced the launch an offer and take-over bid to acquire up to 74,230,750 ordinary shares in the Trinidad based Guardian Holdings at US$2.35 each, through its wholly-owned subsidiary, NCB Global Holdings Limited.
Guardian Holdings, a publicly-traded company listed on the Trinidad and Tobago Stock Exchange, and last traded at TT$16.55 around US$2.45. Guardian has 231,899,986 ordinary shares in issue with NCB Group holding approximately 69,547,241 units acquisition of the stated shares would take their holdings to 62 percent of the company and thus return the company back to Jamaican majority ownership which it had in the 1990s.
The offer, if successful, would result in NCBFG acquiring a controlling 62 percent interest in GHL following the 2016 acquisition of a 29.99 percent interest. Unless extended, the Offer period will close on January 12, 2018. Full acceptance of the Offer would result in a cash payment by NCBFG of the sum of up to approximately US$174,442,262 to the shareholders of GHL who accept the Offer.
Arthur Lok Jack Chairman of Guardian was one of the original sellers of Guardian shares to NCB and would have sold more at the time, but if NCB had acquired more then, it would have triggered the take over bid rule of the TTSE, requiring them to offer to buy the majority.
Guardian Group profit attributable to shareholders for the nine months ended September 2017 amounted to $254 million, a decline of $6 million compared to the corresponding period last year $260 million. NCB Group made profit of $19.1 billion for 2017, up from$14.45 billion in 2016.
The Offer will be conditional upon NCBFG acquiring control of GHL and obtaining regulatory and other approvals required to acquire the GHL Shares in Trinidad and Tobago, Jamaica as well as all other jurisdictions in which GHL and its subsidiaries are regulated.
According to President and Group CEO Patrick Hylton, “We believe that this partnership will not only support our strategy to expand regionally, but will provide numerous growth opportunities for both NCB and GHL. The successful completion of this Offer will be a significant milestone for our business and we anticipate the great potential that this presents.”
Last week NCB announced the acquisition of the majority stakes in Clarien Bank in Bermuda.

Over 1,000 applicants push FosRich IPO over

Mark Croskery Managing director of Stocks & Securities brokers fro teh IPO speaking to Cecil Foster, Managing director of FosRich.

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.

VM Investments press conference for launch its IPO. from left is Michael McMorris – Chairman of VMBS, Courtney Campbell Group CEO, Devon Barrett CEO of VMIL and Janice McKenley – Group Chief Financial Offer.

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.

Devon Barrett CEO of VMIL addressing invitees at the formal announcement of the IPO, Beside him is Janice McKenley.

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

VM Investment parent of VM Wealth Management planning to list.

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.