Initial Public Offers

Proven expanding investment foot print

January 10, 2021 by IC Insider.com

Proven Investments signed an agreement to acquire a 50.5 percent controlling interest in Roberts Manufacturing Company, a Barbados based company, Proven announced this past week.
The agreement is for the purchase of shares from Massy Properties (Barbados) for US$21,452,500. “The consideration includes real estate for US$1,452,500, with the rate of return on the investment put at 15 percent based on the purchase price,” Christopher Williams, CEO of Proven, advised ICInsidier.com.
“Closing is scheduled to take place 3 business days following the receipt of all regulatory and governmental confirmations, approvals, and acknowledgments, save that the closing date may not be extended beyond 30 days,” Proven further advised.
“RMCL produces a variety of margarine, shortening, soyabean oils and animal feed products, which are distributed to over 15 markets regionally and internationally.
“The proposed acquisition is one of three that Proven has been negotiating,” Williams advised ICInsidier.com. One is said to be a financial institution in the Cayman Islands that is subject to regulatory approval and will result in the group owning two companies in that country with the 100 percent owned International Financial Planning (Cayman) Limited. The other business under consideration is in the business of property rental.
“The acquisition of the majority shareholding of RMCL is aligned with PROVEN’s strategy to grow through acquisition in the real sector throughout the Caribbean and Latin American regions with a view to create value to its shareholders.” the Proven release stated.

Christopher Williams, Proven Investments CEO.

RMCL has Ansa Mc Al as the minority shareholder who manages the operations. Proven decided to invest in the manufacturing operations due to the high rate of returns on investments. Management is already in place running it and the appeal of the products to a wide cross section of customers regionally and in developed countries.
Proven generated profit attributable to shareholders of US$29.98 million for the financial year to March 2020 and is boosted by US$25 million in gains from the sale of part of their investments in Access Financial Services. The company suffered losses of nearly US$18 million on other investments and ended the year with a total comprehensive profit of US$18 million.
For the September quarter, Proven generated profits of US$3.4 million and US$4.8 million for the six months. That should compute to around 1.5 US cents per share for the year, but Williams expects this to jump to 24 US cents per share in 2022. Whether that target is achieved or not is unsure at this stage, but what is known is that the last capital raise was not all fully utilized as expansion plans slowed and would have generated a lower rate of return than if they were used in the acquisition of profitable ventures. In addition, the latest announced acquisition will add around US$3 million to annual profit or about 4 cents per share and push Earnings per share within the 20 cents range. The investment market recovered from the collapse in the March quarter and resulted in total comprehensive profit of US$17 million for the September quarter and US$27 million for the half year, thus reversing the 2020 losses in the investment market.

Proven Investments traded the most shares on the market.

To assist in funding acquisitions and ensuring adequate liquidity, the company has offered for sale 89,416,037 new ordinary shares to existing shareholders and the public. The company has the option to upsize the issue to a maximum of 134,124,037 shares to raise a maximum of US$30 million, assuming the Invitation is fully upsized. If fully upsized, the total number of shares in issue will be 759.43 million units.
The price to be paid per share by Existing Shareholders is 22.50 US cents or J$32.80, Key Investors 22 US cents or J$32.10 and others 23 US cents or J$33.50. All the prices are below existing market prices of 25.69 US cents and J$35.79 in the Jamaican segment of the Jamaica Stock Exchange. Acquisitions in the financial sector will provide the opportunity for cross selling products and services to clients in each company, as well as provide the opportunity for some amount of cost reduction as certain administrative and other costs can be shared within the group.
The Directors anticipate that not less than 50 percent of the Company’s annual after-tax profits will be distributed as dividends, subject to the requirement for re-investment of its profits to finance potential growth and to ensure sustained development, as well as due compliance with the solvency and liquidity criteria set by the Company’s Investment Policies.
The official closing date for the offer is January 29, 2021.

Filed Under: Feature Stories, Initial Public Offers, JSE Combined, Stock Market Tagged With: APO, Emerging markets, Jamaica Stock Exchange, Jamaican stocks, Proven Investments

Sygnus BUY RATED APO

December 22, 2020 by IC Insider.com

Sygnus Credit Investments public share offer that opened on December 18 is scheduled to close on Wednesday, December 23; the shares are attractively priced and should be eagerly taken up as investors traded the shares at $28 and 21 US cents in the last twelve months.
Sygnus is an international business company incorporated under the International Business Companies Act of Saint Lucia. It provides non-traditional financing to middle market businesses. The objective of SCI is to generate attractive risk adjusted returns with downside protection. SCI’s dividend policy is to pay out up to 85 percent of net income.
The company started operating successfully in 2017 in Jamaica, with its shares listed on the Jamaica Stock Exchange in 2018, after offering 90.9 million shares to the public that were fully taken up by investors.
Jamaican denominated shares were then priced at J$13.72 for each and 11 US cents for each US dollar denominated share to raise US$10 million. Investors put down more than $3.8 billion to purchase the shares and the issue was up-sized to US$20.3 million. The FSC has now placed an upward limit on the upsizing of IPOs to no more than 50 percent of the initial amount offered.
The company is now offering 196.4 million shares to the public to raise US$22 million or J$3.3 billion equivalent in an additional public offering. The offer may be upsized to US$32 million or J$4.8 billion. The issue is priced at $14.70 and 13 US cents per share for existing shareholders and team members. The shares are available to other investors at $16.30 and 14 US cents each. The stock last traded on the Jamaica Stock Exchange at $16 and 15.7 US cents. The Minimum Subscription is 1,000 Shares.
Sygnus provides funding to mid-market businesses across a wide cross section of industries including, Manufacturing, Distribution, Energy, Financial Services, Transportation and Infrastructure by way of Notes or bonds, asset-backed debt, preference shares, leveraged debt, bridge financing, mezzanine debt, subordinated debt and other structured private credit instruments.
Mezzanine financing is a hybrid of debt and equity financing that gives the lender the right to convert to an equity interest in the company in case of default, generally, after venture capital companies and other senior lenders are paid.
Sygnus states that its industry exposure is limited to a maximum of 35 percent with no more than 25 percent in any single company or group of companies. The typical tenor is up to 5 years, with a maximum of 7 years in exceptional cases.
All investments they are involved in must have a clear exit strategy, which must be covered by, at a minimum, repayment of debt, sale of position, or Initial Public Offering.
The funds raised are to take advantage of pipeline opportunities in high quality middle-market firms, the company states. Increase flexibility to expand origination in trade, acquisition and asset-backed finance and play a leading role in financing the recovery and growth of middle-market firms. Pay down US$10M bridge notes and allow for more efficient utilization of debt markets in the future that will lower cost and improve the company’s flexibility in funding clients’ demands. Optimize the use of leverage to drive the rate of return on equity expansion and enhance dividends.
The company reports that the average annual dividend yield is 5 percent on USD shares and 5.5 percent on Jamaican dollar shares based on the IPO price of the stock in 2018.
The company has US$62.3 million invested in 29 Portfolio Companies in September 2020, an increase of 117 percent over September 2019, with an outlay of US$29 million in 18 Portfolio Companies. The company has commitments amounting to US$8.7 million to fund.
Investments are within the Caribbean, with 50 percent in Jamaica, the Dutch Caribbean islands account for 17 percent and St Lucia 12 percent, with the rest spread over other countries in the region.
The Company’s portfolio of investments surpassed the US$50 million for the year to June 2020 while generating US$4.5 million in total investment income and US$1.97 million in net profits, 3.8 percent less than the prior year with US$2.05 million. First quarter results to September saw Net profits climbing 51 percent to US$798,000 as total investment income grew 19.8 percent to US$1.3 million and portfolio investments grew 117 percent to US$62.3 million.
Shares will be allotted on a first come, first served basis. In other words, the first set of applicants will get full allotment until all the shares are issued as such late applications may end up getting no shares.
ICInsider.com projects earnings of $1.80 per share for the current year to June 2021 based on the existing issued shares with a PE ratio of 9 and 12 for the US dollar issue. The company is poised for growth. The stock is undervalued and should be bought for growth and income; accordingly, it gets ICInsider.com BUY RATED accolade.

Filed Under: Buy Rated, Feature Stories, Initial Public Offers Tagged With: APO, Daily Trading, Emerging markets, IC Insider BUY RATED, Jamaica Stock Exchange, Jamaican stocks, JSE US dollar market, Sygnus Capital Investments, Trading Activity

Alliance IPO is now

December 21, 2020 by IC Insider.com

Shareholders of Alliance Financial Services will offer later this month just over 1.25 billion shares to the public for purchase at $1.59 each, for a total consideration of $1.99 billion.
The Invitation opens at 9 am on December 28 and will close at 4 pm January 11, subject to the Selling Shareholders’ right to close the issue at any time after it on the Opening Date once the shares are fully subscribed.
During its sixteen (16) years of operation, the company has grown to become a notable Cambio and remittance service provider in Jamaica.
The company reported a $709 million profit for the year to September 2020, from revenues of $1.5 billion. The 2020 profit equates to earnings per share of 11.3 cents for a PE of 14 but using the 2019 earnings the PE would have been 12.7, with both below the Jamaica Stock Exchange Main Market average of 17.
JMMB Securities are brokers for the offer.

Filed Under: Feature Stories, Initial Public Offers Tagged With: Alliance Financial Services, Emerging markets, Initial Public Offer, IPO, Jamaica Stock Exchange, JMMB Securities

Key rights issue offers big upside

December 17, 2020 by IC Insider.com

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Existing Stockholders of Key Insurance will be given the right to apply for new shares in the company and have been provisionally allotted 259 new ordinary shares for every 500 existing ordinary shares at $3.50 each.
The offer is renounceable and will therefore allow existing Key shareholders to assign their rights to these shares, wholly or in part, to others. Shares not taken up will be available to shareholders who indicate they wish to acquire more new ordinary shares than their allotment.
The issue will open on December 23 and will close on January 11, 2021, with the last date to renounce the rights, being January 4, 2021.
The issue will raise approximately $670 million to boost the company’s equity base. In the offering circular dated December 11, Chairman of Key Insurance, GK Group CEO Don Wehby explained, “The capital the rights issue will raise will be critical to the implementation of Key’s vision and strategic plan, which focuses on achieving profitability targets and sustainable long-term growth, which in turn will provide an attractive return on investment to our shareholders. The Board is extremely optimistic about Key’s future, and we are confident that the management team is well positioned to maximise the Company’s full potential and shareholder value.”
In March this year, GraceKennedy Financial Group acquired 65 percent of the share capital of Key.
The Issue is one component of the overall strategy implemented by Key’s Board and management team in 2020 geared towards strengthening the Company’s capital base so as to ensure regulatory compliance and future growth. Key has also entered into an agreement for the divestment of its investment property located at 18-22 Knutsford Boulevard. The sale of the property will be completed in the first quarter of 2021.
The company reported a small profit for the September quarter of $5 million from net premium income of $204 million but reported a loss of $538 million before tax credit of $180 million for the year to September. The year to date loss. includes a one-off charge of $323 million against profit.
The offer is underwritten by GK Capital Management. The stock’s last trade on Wednesday was $8.40, giving shareholders a big incentive to purchase.
This issue is the third to come to the market at the same time. Sygnus Credit Investments Additional Public Offer (APO) to open on December 18 and closes on December 23 to raise upwards of US$10 million while Derrimon Trading APO opens and closes in January to raise $3.50 billion.

Filed Under: Initial Public Offers Tagged With: APO, Derrimon Trading, Emerging markets, GK Capital Management, Jamaica Stock Exchange, Key Insurance, rights Issue, Sygnus Credit Investments

Virtues & pitfalls of OPAs & stock splits

October 12, 2020 by IC Insider.com

A reader of IC Insider.com asks the following question. In general, based on what l have read, listed companies can raise capital faster than getting a loan. I think there is a risk for the company that the Additional Public Offer (APO) can be undersubscribed. What are other ways APOs may hurt the company?
An APO is just like an IPO but it is usually better as the former is already listed and has followers and a wide number of shareholders who are familiar with the company’s history of management and financial wellbeing.
Shares issued to the public can be undersubscribed if the pricing is out of line with investors’ expectations or if market conditions change adversely after the issue opens. Bear in mind that the management and their Broker would get a sense from the market whether the issue will be taken up or not. Brokers will usually do roadshows to pitch an issue or get feedback from their clients before pricing and going to market with the issue. At least with an APO, the market has already determined the value investors place on the company so pricing is easier than for an IPO that has to be priced off the indicative market valuation.
One more question? if there’s a stock split after an APO ( thinking of PanJam), might it be better to buy shares after the APO as they could buy more shares for less money, is my understanding correct?
Stock splits tend to cause the stock price to rise because the news of the split and the lower share price stimulate short-term interest and if investors wait until after the split they are likely to pay more for the stock in real terms. In the case of PanJam buying in the APO could be the best bet. It, however, depends on the timing of the split as well as that of the APO. The odds are that the split would take place before the APO and if history is anything to go by the stock price will rise and result in a higher APO price than the price before the split. Buying the stock now before the announced stock split may be the better move.

Filed Under: Initial Public Offers, Investment Tips Tagged With: APO, Initial Public Offer, IPO, PANJAM Investment

Tropical Battery IPO oversubscribed

September 28, 2020 by IC Insider.com

oThe Tropical Battery issue of 325 million ordinary shares at $1 each opened on Tuesday, September 22, was oversubscribed. The company exercised the option to close the offer early at the end of the opening day.
The offer comprised shares sold by existing shareholders and by the company. The net proceeds that the company will get will be for expansion and upgrading of the operating facilities and working capital needs.
Earnings per share are around 7.7 cents, putting the stock is price value at a PE ratio of 13 times 2020 earnings, leaving little or no room for short term gains, with it, priced 19 percent above the market average.
NCB Capital Markets, brokers for the issue advised that applicants of reserved shares will be allocated in full while applications in the General Public Pool will receive the first 50,000 units plus approximately 30.6499 percent of the excess shares they applied.
All monies to be refunds will commence next week Wednesday, September 30, will be processed as per their instructions on the GoIPO platform. Refunds to all other applicants will be made to the respective broker.
The company is t listing on the Junior Market of the Jamaica Stock Exchange with the profit for the next five years not subject to corporate taxes and the following five year period resulting in taxes paid at 50 percent of the regular rate.
The listing will take the number of Junior Market companies to 41 and the 44th company to be listed on that market since 2010.

Filed Under: Company News, General Business News, Initial Public Offers

IPOs are back the Tropical issue

September 15, 2020 by IC Insider.com

Just when investors thought COVID 19 had killed off IPOs for this year, suddenly pops up, Tropical Battery‘s long-promised initial public offer. The prospectus for the issue is now available to the public.
The issue for 325 million ordinary shares at $1 each of with up to 187.5 million units reserved for priority applications, opens September 22 and is scheduled for closing on September 30, subject to the right of the Company to close it earlier.
The Company intends to apply for the shares to be listed on the Junior Market of the Jamaica Stock Exchange, subject for at least $260 million being raised, by way of this invitation.
The total issued shares following the offer will be 1.3 billion units, with the parent company owning 75 percent. That will allow enough shares to be in the public hands to facilitate adequate liquidity in the stocks for some time.
The Company generated profit before tax of $87 million from revenues of $1.74 billion in 2019, a decent increase of 18.6 percent higher than in 2019 and a pretax profit of $45 million from revenues of $1.47 billion in the prior year, to September or 8.6 percent above the 2018 sales.
Gross operating revenue for the nine months to June this year increased nine percent to $1.36 billion from $1.25 billion in 2019, with profit before taxation falling from $67.6 million to $62 million.
Future growth, the Company says, “will come primarily from the addition of new product lines, i.e., Renewable Energy Batteries, Oils and Lubricants, Tyres, etc., organic growth of existing products, expansion and the renovation of our retail stores.”
The proceeds of IPO will be split equally between the selling shareholder and the Company, resulting in $162.5 million going to each, net of cost.
The Company plans to use the amount collected for expansion and working capital purposes, including but not limited to new product lines, expansion and renovation of retail stores, including an expansion of the parking area at the retail store at Grove Road in St Andrew. Completion of the buildout of and relocating to the new warehouse, head office and retail store at Ferry, Acquiring and install information technology systems for greater efficiency and improve customer experience and expansion of Mobile delivery fleet of vehicles.
Total shareholders’ equity at the end of June stands at $593 million, while our long term liabilities fell by to $315 million with the total interest-bearing debt of $415 million. The Company is owed $190 million by a related party and is interest-free, but payable on demand.
With earnings per share around 7.7 cents, the stock is priced around a PE ratio of 13 times 2020 earnings, leaving little or no room for short term gains.
NCB Capital Markets are the brokers for the offer. Unfortunately, for investors, there are no forecasted earnings included in the prospectus to help to guide them. This practice leaves a lot to be desired and it is fulltime, the authorities step up to the plate and ensure that all prospectuses include forecasted data for a least three years. That is not asking too much in the drive to build a developed capital market.

Filed Under: Company News, General Business News, Initial Public Offers Tagged With: Emerging markets, Jamaica Stock Exchange, Jamaican Stock, junior market, NCB Capital Markets

Trans Jamaican Highway trades at $1.02

March 24, 2020 by IC Insider.com

Shares of Trans Jamaican Highway trades at $1.02 after listing this morning. The stock that was sold to the public at $1.41 in February traded 17,804,223 up to $1.39 at 11.18 AM and has fallen 28 percent from the Initial Public Offer in the Jamaican dollar market but far less based on US dollar trading.
Bids in the market to buy are sparse with twenty bids to buy between $1.02 and a low of 50 cents, while sellers are dominant with 600 on the offer to sell from $1.03 upwards.
The public offer attracted 36,062 applicants and was oversubscribed and with a total intake of $25.12 billion.
The public offer attracted 36,062 applicants and was oversubscribed and with an intake of $25.12 billion.
The Concession Company and the Public Sector Employees reserve shares pool were undersubscribed. The excess was transferred to the Registered Pension Funds and E-Tag Reserve Pools. Applicants in the Registered Pension Funds Reserve and E-Tag Reserve Pool were fully allotted based on transfers to the Registered Pension Funds and E-Tag Reserve Pools. Underwriters Reserve Pool was allocated shares on a pro-rata basis as the pool was oversubscribed, with the excess moved to the General Public Pool.
Allocation to the General Public as a result of oversubscription was allocated up to 10,000 shares with applications in excess of 10,000 shares allocated increments of a further 10,000 shares until all shares were allocated.
Trans Jamaica came to the market at a PE ratio of 24 times 2020 earnings. Since the opening of the IPO much has happened in the capital market with prices falling sharply with the spread of the Coronavirus. Importantly, since March traveling around Jamaica has declined and that is expected to affect the revenues for the highway as long as business activity remains low.

Filed Under: Breaking News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: Daily Trading, Emerging markets, Jamaica Stock Exchange, Jamaican stocks, Trans Jamaica Highway

TransJamaican IPO pulled in $25.5B

March 10, 2020 by IC Insider.com

Ministry of Finance, Dr. Nigel Clarke in his budget presentation in the Jamaica Parliament stated that the TransJamaican Highway IPO pulled in $25.5 billion from 36,428 applicants.
National Road Operating and Constructing Company (NROCC) that owned all the 12.5 billion ordinary shares that are issued, 8 billion ordinary shares at $1.41 each and they upsize the offer by an additional 2 billion shares.initial
the issue attracted more applications than the 31,000 brought in by Wigton Windfarm. The shares went to the market at a PE ratio of 24 times earnings and will hit the market at a time when the market values have declined sharply since the debut of the IPO in February.

Filed Under: Breaking News, Initial Public Offers Tagged With: Emerging markets, Initial Public Offer, Jamaica Stock Exchange, Jamaican Stock, TransJamaica Highway

Caribbean Assurance oversubscribed

February 18, 2020 by IC Insider.com

Caribbean Assurance Brokers Initial Public Offer of shares to the public closed shortly after opening on Tuesday, February 18, with the issue oversubscribed, Mayberry Investments, brokers for the issue announced.
Caribbean Assurance Brokers offered 52.5 million ordinary shares at the price of $1.91 per share to the general public and selected group of subscribers. Mayberry will advise Applicants of the preliminary basis of allotment of the shares by Friday, February 21, under the Junior Market Rules of the Jamaica Stock Exchange (“JSE”). The Company has made an application to list the shares on the Junior Market of the JSE.
The stock is attractively priced and is likely to surge sharply after the issue opens for trading.