Initial Public Offers

Sagicor offers shares in Real Estate X Fund

September 18, 2013 by IC Insider.com

Sagicor Real Estate X Fund is offering shares in an initial public offering (IPO) which opens on September 24, 2013 and will close on October 18, 2013. The offer is subject to the right of the Company to close the Subscription List at any time without notice if subscriptions have been received for the full amount of the shares available for subscription and also subject to the right of the Company to extend the closing beyond that date. The shares are expected to be listed on the Jamaica Stock Exchange.

A maximum 500,000,000 shares are available for subscription in this IPO with a minimum of 100 shares and in multiples of 100 shares. In the event that subscriptions or applications are received for more shares than the number of shares available for subscription and sale in this IPO, X FUND reserves the full, unqualified and absolute right to increase the number of shares in the IPO in order to satisfy all or part of the applications in excess of the 500,000,000 shares, which are comprised in the IPO but not exceeding a further 750,000,000 shares. Sagicor Jamaica and PIF have indicated that they jointly intend to exercise their options to buy shares at the IPO price with a view of holding up to 80% of the issued shares of X FUND.

The fund will invest in Sagicor real estate unit trust which holds the following properties in the fund: The R. Danny Williams Building (formerly Sagicor Centre in New Kingston), • 63-67 Knutsford Boulevard (New Kingston) • 78a Hagley Park Road (Kingston) • Sagicor Industrial Park (Marcus Garvey Drive Kingston), • Sagicor Industrial Park (Freeport, Montego Bay) • Sagicor Montego Bay Commercial Centre (Montego Bay) • Sagicor Industrial Park (Norman Road Kingston) • Spanish Town Shopping Centre (St Catherine) • 23-25 Seymour Avenue (Kingston) • Jewel Dunn’s River (St Ann) • Jewel Runaway Bay (St Ann) • Jewel Paradise Cove (St Ann).

The authorised capital of the Company is US$5,000,001,000. There is a Special Share which is held by Sagicor Jamaica, which the company sates is to ensure that the structure of the investment is not subverted by investors who may acquire substantial interest in the Company.

Sagicor Real Estate X Fund Limited (“X FUND”) is an International Business Company incorporated in Saint Lucia. Since its incorporation on May 31, 2011 it has not conducted any business on its own account other than to enter into certain agreements in anticipation of this IPO. The fund proposes to apply the proceeds of the IPO (“the IPO Proceeds”) to acquire other units in the Sigma Real Estate Portfolio. Pending investment of excess cash in units in the Sigma Real Estate Portfolio, the X FUND may invest in other assets including marketable securities. Thereafter the Company will carry on business as a passive investment holding company.

X Fund intends to distribute by way of dividends up to 85% of its annual net realised income.

The Articles of Incorporation of X FUND specifically authorises X FUND, from time to time, by a resolution of its directors, to issue additional shares in exchange for units in the Sigma Real Estate Portfolio. This will allow X FUND to purchase additional units from Sagicor Jamaica and/or PIF or direct from Sigma Real Estate Portfolio, without securing the approval of the shareholders in general meeting.

IC Insider call | Return on real estate in the form of income is low and growth in the value of the share price is unlikely to be rapid and may not show any growth in the short run. The fund provides a means of diversifying into the real estate market as well as in the tourism sector, but the latter can be great for a few years and not so great for some years.

This IPO is a real estate play that will not give investors the best return for their money. Investors will be buying shares at 100 percent book value with roughly a 4 percent yield in Year One. Meanwhile, the Pan Jamaican Investment Trust, which has real estate assets amounting to around 25 percent of total assets and generating a third of gross income from real estate, is selling at a huge discount to book value of $51 versus book of $78. Additionally, Pan Jamaican’s decision to invest in the new Marriott Kingston hotel, and no doubt with low interest rates, as well as other ventures into real estate developments, is likely to enhance the real estate portfolio over time. More importantly, the share price of Pan Jam stands a much greater chance of appreciation than a pure real estate fund.

The fact is that real estate does best when leveraged. Specifically, the Kingston Properties REIT is an excellent real estate play that could outperform the Sagicor Real Estate X Fund over time.

Filed Under: Company News, Initial Public Offers, Stock Market, TTSE Market Tagged With: JSE Company, KPREIT, Pan Jam, Sagicor

Capital market is alive!

September 10, 2013 by IC Insider.com

Information gleaned by IC Insider has revealed that the capital market has been very active in Jamaica, despite the challenging economy.

Mystic Mountain, the visitor attraction located in Ocho Rios, offered $500 million of 10.50 percent preference shares in a private placement in July. The company intends to apply to the Jamaica Stock Exchange for the listing of all of the Preference Shares by way of introduction and such application will be made after the lapse of six months following the closing of the Offer. NCB Capital Markets were the brokers for the issue.

The original offer was for up to One Hundred Million ($100,000,000) at 9.75% 5 year Cumulative Redeemable Preference Shares at a price of Five Dollars in Jamaican currency (J$5.00) per share with an option to extend for a further two (2) years with interest rate of 10% in year six and 10.50% in year seven. This was later upped to $500 million at 10.50 percent for all years.

CAC2000 Ltd, an engineering company specializing in applied air conditioning systems, is said to have been in the market to raise $100 million in preference shares as well. Details of the offer and the terms are not yet known to IC Insider.

Facey Commodity, a subsidiary of the Mussons Group of Companies, has raised US$2 million at 9 percent commercial paper with a duration for just over a year. This is the third trange within a six week period. The instrument has option that investors can opt to get back 90 percent of the principal after six months by giving 30 days’ notice. Interest is payable monthly. Mayberry Invesrments is the broker handling the paper.

Jamaica Money Market Brokers (JMMB) went to the market to raise $750 million between 7.25-7.50 percent but collected $1.44 billion as JMMB clients gave the issues a ringing endorsement by pumping in $1.4 billion of the amount, while the general public offered to purchase only $39 million. The issue will be listed on the Jamaica Stock Exchange. What has been overlooked by investors in this issue is that JMMB presently has preference shares on the market with yields of 8.50 and 8.75 percent, which is a far better deal. Similarly is the Proven Investments instrument at 8 percent, also listed on the Jamaica Stock Exchange.

Jamaican Teas is another company in the process of tapping the market for a bond issue to raise funds.

Related posts | JMMB share offer taken up | JMMB to raise $750M

Filed Under: Initial Public Offers, JSE Main Market, Stock Market Tagged With: Capital Markets, JSE Company

JMMB share offer taken up

September 3, 2013 by IC Insider.com

Jamaica Money Market Brokers advised that the offer to purchase two set of preference shares at 7.25 percent and 7.50 percent was oversubscribed and in accordance with the provisions of the Prospectus, JMMB will allot further Preference Share to all applicants in the amount that was subscribed. All Shares applied for will be allotted to applicants out of Preference Share currently held by JMMB.

JMMB advised that the Offers closed on the last day of work week (last Friday) and is oversubscribed. JMMB is currently encountering administrative constraints in the compilation and processing of the subscription applications in order to provide the information to the Jamaica Stock Exchange by close of business September 2, 2013.

Filed Under: Company News, General Business News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: JMMB, JSE Company

First Citizens lousy investor’s relations

August 28, 2013 by IC Insider.com

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It was once said that as a country, Trinidad wanted to be the financial capital of the Caribbean, but recent activity on the country’s capital market indicates that they have a far way to go in achieving such a goal — if that is possible.

First Citizens Bank launched the largest ever Initial Public Offering (IPO) of shares in the history of the T&T Stock Exchange with a market value of approximately TT$1.1 billion on Monday 15th July at an offer price of TT$22 per share for 48,495,665 shares. The bank said the IPO will assist in widening its capital base in order to facilitate future strategic expansion plans. The offer was slated to close on August 9 and was extended to Monday, August 12th 2013 as the 9th was a public holiday.

First Citizens Brokerage & Advisory Services, a subsidiary of First Citizens Investment Services, is the Lead Broker for the Offer for Sale. The handling of the entire issue is a classic demonstration of poor investor relations and that is not a good sign for investors.

Listing on September 16 | The T&T Stock Exchange has advised that First Citizens has applied to have its shares listed on the TTSE on September 16th 2013 subject to the approval of its application to list by the Board of the TTSE.

This is madness and is reflective of lack of sensitivity in their financial market. First off, the opening time for the issue was unnecessarily long so those who applied early had their funds tied up without any compensation. Even worse is after nearly a month of closing of the issue, investors are yet to know what is their allocation of shares. First Citizens said on their website that investors will find out between August 30 and September 6.

A check with the T&T Stock Exchange as to why it will take such a long time for the shares to be listed indicates that the problem is not with the Exchange, who are ready to list as soon the information is available and is approved by the Stock Exchange Council. A Stock Exchange source suggests that the delays maybe due to the broking community not being fully conversant with how to execute a timely IPO.

Oversubscription | Information obtained suggests that the issue was about two times oversubscribed with institutional investors probably being the main subscribers resulting in the high level of oversubscription.

While the management has made major missteps in dealing with this issue, IC Insider still rates the stock as Buy Rated based on the issue price and potential earnings. We believe there should be a steep appreciation in the stock’s value when it is compared with others within the financial sector.

Filed Under: Company News, General Business News, Initial Public Offers, Stock Market, TTSE Market Tagged With: First Citizens, Trading Activity, TTSE

Buy Rated stock list grows

August 19, 2013 by IC Insider.com

Monday, 19th August 2013 | The reporting season is now in full swing with June quarterly results rolling in almost every day.

Stock Watch | New to the Watch list is RJR as the company reported a strong turnaround from cost cutting and increased revenues in the June quarter to record a small profit. Look out for our post on their last quarter later this week.

Buy Rated | We have added First Citizens to the Buy Rated list since the IPO has been fully subscribed. Unfortunately investors will have to wait until 16th September before they can trade in the stock on the Trinidad Stock Market.

Also new to the Buy Rated list is General Accident, a Junior Market company. The company’s continued good quarterly results have made the stock undervalued when compared to other companies. We will post our report on the latest quarterly results shortly.

Buy Rated JMMB traded heavy volumes in Jamaica this past week and all shares on offer in the Trinidad market were snapped up in two days as the company posted very strong growth in profit for the first quarter to June. The stocks seems poised to move up in the coming week.

Caribbean Cement rallied sharply in the past week and looks as if it will go further in the coming week. The same applies to its parent Trinidad Cement that has shown 85% increase in value since July 1st with lots of potential based on the TTSE PE Ratio chart.

Better than a broker’s ‘buy’ recommendation, IC Insider has no vested interest in any stock transaction or conflict of interest. Our research is backed by published reports of the company’s performance and insights of future earnings that can be found at ICInsider.com. The final decision to buy, or not, is your personal choice.

To find published reports for a Buy Rated stock on IC Insider, please use category ‘Buy Rated’ under Company News or enter the company name, in full or part at ‘Search IC Insider’.

Filed Under: FX Market, Initial Public Offers, JSE Main Market, Stock Market, TTSE Market Tagged With: JSE Company, TTSE

T&T Citizens Bank IPO oversubscribed

August 12, 2013 by IC Insider.com

Word out of the Twin Island state of Trinidad & Tobago indicates that the Citizens Bank of Trinidad IPO, which went on sale July 15th and should have closed on Friday, August 9, is to be closed today. The new closing date is due to Friday being a public holiday in Trinidad.

The stock, which was priced at $22 per share for the IPO, is said by our sources to heavily oversubscribed from last week. The oversubscription is in line with comments heard by IC Insider out of Trinidad prior to the opening of the public offer suggesting that the shares will be avidly taken up. The stock, which has a PE of 11 times earnings at the IPO price, is expected to jump in price when listed later this month.

The government of Trinidad & Tobago is expected to benefit from the proceeds of $1.1 billion from the issue.

The take up of the issue is welcomed news for the Trinidad & Tobago stock exchange. Not only will the number of companies be increased but the new issue will generate additional revenue from annual listing fees as well as fees when the shares are traded.

The exchange is set to collect an annual listing fee of TT$130,000 plus TT$25,000 for the trading symbol and a fee for each trade amounting 0.30 percent of the consideration. The Central Depository will also garner fees for each trade as well.

Related Posts | First Citizens’ $1B IPO opens today

Filed Under: Company News, General Business News, Initial Public Offers, Stock Market, TTSE Market Tagged With: First Citizens, Trading Activity, TTSE

Epply fast listing

July 29, 2013 by IC Insider.com

Shares of Epply Limited, the latest initial public issue to make it to the junior market that came to market last week, started trading today. The public issue, which closed on the July 22, is the fastest IPO listing since the junior market started and probably the fastest listing on the JSE ever. For the listing to take place within a week suggests that something must have gone right with it. Nevertheless, it’s a snail pace compared to international standards.

Previously, the listing of the JSE’s own shares took 2 weeks after the issue closed on July 8th and that was one of the fastest. There clearly is much improvement needed in the timeframe between listing and IPO close. There is no reason why the JSE can’t get to international standards a list within a day or two after closure of an IPO and so ensure greater liquidity in the market. All that is required is the reconciliation of subscriptions application, money paid and the allocation of shares where there is oversubscription. In this regard, the formula for dealing with oversubscription can be determined ahead of the closure of an issue.

All the other things such as paying stock exchange fees and final approval can surely take place within a day if the application for listing is effectively done ahead of the IPO.

Well into its first trading day, there were no stocks of Epply on offer nor was there any listed to be bought. One week after listing, the JSE ordinary shares are yet to traded even as the bid is now up to $3.25 in Monday’s trade.

Image courtesy of Simon Howden/FreeDigitalPhotos.net

Filed Under: Company News, General Business News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: Eppley, JSE Company

Eppley 18th junior market listing

July 29, 2013 by IC Insider.com

Press Release 29-Jul-2013 | Eppley, the latest initial public which was closed on Monday July 22, was listed on the junior market of the Stock Exchange on Monday July 29 and brings the junior market listings to eighteen. Eppley is only the second company to be listed on the junior market for 2013 and only the third listing on the stock exchange this year. Eppley is one of Proven Wealth stockbrokers’ first introduction to the market. The stock did not trade on the opening day, had no bids or offer to buy or sell.

Marlene Street Forrest, General Manager of the Jamaica Stock Exchange speaking at the ceremonial listing, stated that “We cannot overemphasize the importance of the Junior Market in ensuring that new creative ideas, whether manufacturing or in this case, service gets the chance needed to make it from idea to development. The benefit of this market is not only in creating longevity but transparency. The benefit is also in seeing the companies that are listed produce excellent financial results for the company and by extension the shareholders. Growth in companies is almost always accompanied by growth in the economy. We understand that these companies receive a temporary shelter whether from corporate taxes, reduced listing or annual fees but this is done against the backdrop of full disclosure of their financial statements and other pertinent information to shareholders. I believe we can proudly report the following statistics which compares prelisting results to results as at the end of December 2012:

Percentage increases in revenue ranging from 7.75% to 1,626.32%
Percentage increase in profit ranging from 8.08% to 589%
Percentage increase in GCT from 4% to 3,770%
Percentage increase in Statutory Deduction from 3% to 173%

I urge you to remember the advantages of raising capital and listing on the Junior Market; which continue to be the possibility of reducing debt burden and high interest payments by substituting or adding equity capital; the daily valuation of a company’s shares; the ten year corporate tax concession for companies listed on the Junior Market; the low listing fees and the improvement of a company’s profile among other benefits”.

Nigel Clake, Chairman of Eppley, told the audience that Eppley was delighted to have access to the capital market to raise funds to finance their business and to be listed on the Stock Market was a privilege and Eppley would do all in their power to ensure that their reporting would be of the highest standard. He went on to thank the shareholders for the confidents they displayed in Eppley by purchasing the stocks.

Chorvelle Johnson, CEO of Proven Wealth took the opportunity to thank all the persons involved in the listing. She stated that the process was fairly easy with the help that Proven got from the JSE, the lawyers and the regulators. Miss Johnson went on to say that Proven will be working assiduously to bring more companies to list not only on the Junior Market, but on the Main Market, along with other products.

Sharing the historic moment | Andrea Kinach; Marlene Street Forrest; Chorvelle Johnson; Andre Tulloch; Melanie Subratie; Keith Collister; Nicholas Scott and Nigel Clarke.

Filed Under: Company News, General Business News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: Eppley, JSE Company

IPO: Epply closes, JSE to trade

July 22, 2013 by IC Insider.com

EPPLEY offer closes early | The Eppley Initial Public Offer (IPO) which opened today, Monday July 22, 2013 at 9:00, has been closed with the issue said to be oversubscribed. Eppley Limited opened the invitation for subscription for 218,999 shares at a price of $377 per share. PROVEN Wealth, acting as arrangers and Lead Brokers of the offering, announced an early closure of the offer effective at 4:00 p.m., way ahead of the scheduled close on Monday July 29, 2013 at 4:00 p.m.

PROVEN Wealth President & CEO Chorvelle Johnson noted that she is “pleased with the level of subscription. The response to the offer has been very good with the issue being oversubscribed and hence the early closure.” The company is set to announce the basis of allotment within 3 business days.

JSE to start trading on Tuesday | The Jamaica Stock Exchange ordinary shares which were offered public in a recent IPO at $2.85 per share and was oversubscribed, will start trading on Tuesday. The listing brings to 52 the number of companies with ordinary shares on the exchange. Eppley which was fully taken up will bring that number to 53 companies when it starts trading in a few weeks’ time.

First Citizens | In the meantime word out of Trinidad is that First Citizens is attracting great interest but there is no indication that the $1 billion IPO is yet fully subscribed. The issue is scheduled to close on 9th August.

Filed Under: Company News, General Business News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: Eppley, First Citizens, JSE Company

Improved business outlook

July 22, 2013 by IC Insider.com

The perception of present and future business conditions in the most recent survey amongst Chief Executive Officers, Managing Directors and Financial Controllers found that the business community perception has improved relative to the previous survey in April. The survey was carried out by Statin on behalf of Bank of Jamaica in May and data was collected from 300 respondents.

Perceptions about future business conditions also improved for the second consecutive survey. The improvement in these perceptions was in contrast to the declining trend observed in both indicators since the December 2011 survey. “Of note, the improvement may be attributed to continued reduction in uncertainty about the Government’s economic programme” the central bank commented.

Operating Expenses | Respondents continued to indicate that they expect the largest increase in production costs in the next 12 months to reflect the higher cost for utilities. Other costs that were expected to contribute significantly to inflation in the next 12 months included stock replacement and fuel & transport costs. The cost of raw materials and wages & salaries were the input costs least expected to increase over the next 12 months.

The survey also covered a number of other areas in addition to business conditions.