Sweet River Abattoir & Supplies Company initial public offering (IPO) missed by a huge margin, the amounted targeted to be raised, when it closed on August 26, the scheduled date for the closure. The IPO targeted $180 million to be raised from the sale of 46.6 million shares to the public.
According to VMBS Wealth Management, brokers to the issue, “preliminary numbers indicate that subscribers applied for approximately 30.6 million shares totaling approximately $118 million”. The minimum amount to be raised to facilitate listing on the junior market of the Jamaica Stock Exchange was $50 million.
The plan was for the amount targeted to be raised, was to be used in the reduction of bank loans, completion of construction of the new factory facility, installation of a solar energy generation system, working capital and payment of the expenses of the IPO.
The result achieved, is not surprising, the price was well in excess of what investors were valuing junior market stocks at. In IC Insider’s comments on the IPO stated “currently, earnings per share works out at 40 cents, placing a valuation of 9.4 times historical earnings. This is well above the junior market valuation. Value, based on netbook assets, works out at 3 times book, again a very high valuation.”
Sweet River IPO falls well short of target
August 30, 2014 by
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