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.
TransJamaican IPO pulled in $25.5B
March 10, 2020 by
Transjamaican Highway IPO highly overvalued
February 10, 2020 by
After suffering US$11.5 million in losses in 2014, with more losses in 2015 and 2016, Transjamaican Highway (TJH) turned a profit in 2017 of US$1.75 million, with an increase to US$6.5 million in 2018. The company seemed on track for another profitable year in 2019, before costs associated with restructuring debt financing pushed profit off the highway.
IC.Insider.com projects 2020 earnings to be around US$5 million or 6 Jamaican cents per share, from total revenues of US$57 million with a gross profit of $21 million. Finance cost is projected at $15 million, inclusive of preference share dividend with a high, 8 percent coupon rate. The PE ratio is a rich 25 times 2020 earnings, but that should fall to 19 in 2021. The IPO price works out at 1.3 times book value. Shareholders’ equity amounts to $95 million, with borrowings at $245 million inclusive of nearly US$20 million in preference shares, putting the debt to equity ratio at a high 2.6.
National Road Operating and Constructing Company (NROCC), the selling party, currently owns all the existing 12.5 billion ordinary shares, is inviting investors to purchase up to 8 billion ordinary shares of TJH, at $1.41 each. The company reserves the right to upsize the offer by an additional 2 billion shares in the event of oversubscription on the terms and conditions set out in this Prospectus. NROCC estimates that after the issue, new shareholders will own between 64 percent and 80 percent of the issued ordinary shares offer is upsized or not.
Just under 80 percent of 8 billion shares offered for sale is underwritten by NCB Capital Markets, Underwriting of a portion of the offer will ensure the listing of the shares will on the Main Market of the Jamaica Stock Exchange.
A total of 5.36 billion shares are reserved for a select group of applicants and just under 2.64 billion are available for the general public.
Highway 2000 East-West was the first toll road built and operated in Jamaica and connects May Pen and Portmore to Kingston and is operated under a concession agreement.
The concession is for a period of 35 years, with 17 years remaining, with an option to renew for a further 35 years, subject to payment of a renewal concession fee to be determined. The company has the right of first refusal to secure a similar concession to maintain, operate or own, when complete, the leg of Highway 2000 that will extend from May Pen to Williamsfield that will extend the length of the Toll Road by approximately 50 percent.
The Portmore leg of the highway accounts for 56 percent of traffic and 51 percent of revenue in 2019 and Vineyards accounts for 19 percent of traffic and 36 percent of revenue, with Vineyards having higher tolls than any other toll plaza due to more class 2 and 3 vehicles using it.
Traffic on the highway is exceeding the forecasts since 2015 onwards, the prospectus states and is expected to grow at a steady pace, with 4.5 percent in 2020. In 2021, the growth rate rises to 5.6 percent and 6.3 percent in 2022. 
For the nine months to September last year, the Company had revenue from ordinary operations of US$39.26 million, reflecting an increase of US$240,000, on the US$39 million generated for the same period in 2018. This miniscule rise was primarily due to an increase in the annual toll rates starting in July 2019 following the toll rate increases allowed under the Concession Agreement. Revenue was also affected by decreased traffic since March 2019, primarily at the Portmore leg, due to the near completion of construction works of the Nelson Mandela Highway. The reduced traffic at Portmore has, however, been offset by increased traffic at the Spanish Town toll plaza as more users divert to the Nelson Mandela Highway.
There are other opportunities for the company to take advantage of, with expansion locally and overseas. As such, the growth prospects could be very positive going forward.
The stock seems suited for investors with a long-term time horizon. The stock at the offering price is well ahead of the average of 16 for the market based on 2020 earnings. Investors in the IPO are taking on a considerable risk of a pullback in the value of the stock when things settle sometime after listing.
5 hot summer IPOs
June 13, 2019 by
Initial public offers have been extremely popular amongst investors who have made good money from the vast majority of them. Come this summer investors will get five more opportunities to invest in IPOS.
The last issue, Wigton Windfarm made several thousands investors happy, with the price rising as high as 90 percent over the IPO price of 50 cents. Even now that it is trading lower than the peak, investors are still more than 40 percent up on the initial price. Investors in the year’s first IPO, iCreate are not that lucky as the $1.01 they paid for the stock fell as low as 70 cents since and remains well below the IPO price.
Coming this summer are, The Lab that styles itself as a fully integrated 100 percent Jamaican born and bred advertising agency with global reach and an island swagger.
Kimala Bennett, Managing Director of The Lab.
Kimala Bennett is the company’s Managing Director. NCB Capital Markets are the brokers for The Lab, that could be looking at regional expansion. Clients include National Commercial Bank, JPS. Wendy’s Dominos, Supreme Ventures, Wray and Nephew, Grace Kennedy, Caribbean Broilers, Digicel. Persons in the know say this is one of those IPOs to plan for, as it is unique and profitable. NCB Capital Markets is also taking Eppley Property Fund, a company that owns property across the Caribbean, to market this summer as well as QWI Investments, a new company that invests in listed shares.
NCB Capital Markets is also brokers to Tropical Battery Company. The company expects to come to market in July, to raise around $200 million in an IPO our sources state. The company was founded in 1950 and later purchased by John Melville and remains in the family, since. The company’s core business is the sale of automotive batteries, complemented by the distribution of several local and world renowned automotive consumer brands. Tropical Battery’s headquarters is located in Kingston, with distribution centres in Kingston and Montego Bay.
Another that will be coming to market is Sagicor Select Funds Limited an Exchange Traded Fund that is going to market in June to raise $5 billion. The fund according to Sagicor Investment CEO, Kevin Donaldson, will track the JSE Financial Index and will be rebalanced if needed, monthly. Donaldson indicates that the fund currently has assets of $1.2 billion already. Sagicor Investments could have 2 to 3 additional listings before the year ends.
When completed, the new listings on the Jamaica Stock Exchange will raise the listed ordinary shares to more than 80 and total listings to more than 100 securities.
Record new JSE listings for 2019
January 7, 2019 by
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This year could be a busy one for Initial public offers (IPOS) and record new listings on The Jamaica Stock Exchange (JSE), giving investors many more choices for placing their money.
Nine IPOs came to the market in 2018 with three in December, giving investors more investment choices than in 2017. For 2019, ICreate will be the first IPO out of the block. The government owned Wigton Wind Farm’s IPO will be launched early 2019, probably by March, but it is not one for all investors, in spite of what some politicians would want to see happening. IC Insider.com gathers others to come include, a central Jamaica Manufacturing entity with strong export base, a large paint company and one in the BPO sector.
In addition, IC Insider.com gathers that there are at least another three IPOs, should definitely make it to the market this year.
The JSE is projecting for 21 new listing in the current year, Marlene Street Forrest, General Managing Director, informed IC Insider.com recently.
“The main market expects 10 of the total and the Junior Market 11. The list includes both ordinary and preference shares”, Street Forrest stated.
Motta for income & long term gain
July 3, 2018 by
The Musson Group is disposing of all their interest in Stanley Motta Limited in a scheduled sale of all the 757,818,862 ordinary shares currently owned.
Our source states that the business which is a solely a real estate venture is not part of Musson’s core business. If the shares are listed it would be the fifth company connected to the group to do so.
ALorica, parent company of the prime tenant at 58 Half Way Tree Rd.
The offer has 227,348,547 shares reserved mostly for family members of the majority shareholders of the Musson group and 529,970,315 units for the General Public for purchase at $5.31 per share. All the net proceeds will be payable to selling Shareholders. Sources indicates that General Accident Insurance will make be taking up a large block of the shares that offered to the public.
The Company intends to apply to the Jamaica Stock Exchange for the listing on the Main Market of all the Shares and to make such application as soon as is conveniently possible following the close of the offer. The offer opens on July 6, with July 20 set as the closing date.
A business process outsourcing and technology park consisting of five buildings totalling over 200,000 square feet of rentable commercial office space at.
The company owns 58 Half Way Tree Road in Kingston, next door to the new Kingston, comprising 200,000 square feet of rentable space that is fully leased with the lease quoted in US dollar. Tenants are responsible for all expenses arising by reason of occupation, including insurance, property tax and maintenance expenses. The weighted average tenor and annual rent per square foot are 4.7 years and US$12.09, respectively.
The anchor tenant is Jamaica Agent Services Limited, the local subsidiary of Alorica Inc. Alorica is a US based global business process outsourcing firm and the third largest provider of customer experience solutions in the world. The company has over 100,000 employees and operates from 140 locations in 16 countries around the world in North America and the Caribbean, Latin America, Europe, China, the Philippines, and Japan. Alorica serves over 600 clients many of which are on the annual list of the 500 largest companies in the United States as compiled by Fortune magazine. Under the terms of Stanley Motta’s two leases with Alorica, who took possession of Units 2, 3 and 4 each as a “cold hard shell” and paid to complete the buildings at its own expense including all interior walls, ceilings and finishes.
Site plan of 58 Half Way tree road.
The complex will be managed by Felton Property Management Services Limited, a subsidiary of Musson. Felton will be responsible for all day-to-day on-site property management, administration and accounting services.
The property is a designated Free Zone, accordingly, Stanley Motta is exempt from corporate income tax on the rental income of Free Zone property.
The Board expects to distribute approximately 90% as dividends subject change from time-to-time if circumstances dictate.
The Projected Valuation obtained from an independent appraiser, using the income capitalization approach, for Unit 4 at completion is US$21.3 million or approximately $2.63 billion using rates of exchange as at December 31, 2017 and $2.79 billion using the weighted average selling rate according to the Bank of Jamaica as of June 19.
The Company’s sole source of direct income is from the rental of units in the technology park. Its only other source of income is from dividends from Unity Capital, whose sole income is derived from the rental of office space in its building at 58 Half Way Tree Road. The lack of diversification means that the Company is particularly exposed to risks affecting the property market.
The Invitation is underwritten by the Underwriter up to a maximum of the equivalent of US$21 million.
The stock is not for all investors in the short term. Investors looking for relatively high return in US dollars with modest capital appreciation over time may find this an attractive offer. While most investors may view the income in US dollars as a big positive, they ought to be aware that continued devaluation of the local currency going forward is not guaranteed. Of note is that the rental income for a full year is likely to be in the order of US$2.5 million with most expenses picked up by tenants, it should net out around the same amount tax free. The yield on investment will translate to just under 7 percent. The property has room for some amount of expansion which is done could increase the revenues and profit. The new leases while priced at $12 per square foot is set to rise to $14 dollar at renewal in 5 years and should go higher on renewal thereafter.
With Jamaica, on target to lower the fiscal deficit to 60 percent of GDP and with government maintaining balanced fiscal operations inflation going forward is likely to remain low and should result in low interest rates, against this back drop ground, the income from this operation could see investors ultimately acquiring the stock as a good income play and then drive up the price over time.
Sygnus Credit priced for a bounce
April 27, 2018 by
Sygnus Credit Investments is offering 90,909,091 ordinary shares in two classes in the the company at J$13.72 for shares denominated in Jamaican dollar and 11 US cents for the US dollar ordinary shares.
The issues are to be partially underwritten up to the equivalent of US$5 million by Sagicor Investments. If all shares are taken up in the IPO there will be 250,178,614 ordinary shares issued. The prospectus list the current yield on the portfolio of invested funds at 10.3 percent. In the event that of oversubscriptions, the issuer has the right to upsize the amount to be accepted.
Subscription list opens 9 am on May 2 and is scheduled to close on May 16 if not closed earlier.
The capital structure of the company and the choice of investing funds will tend to result in a return closer to fixed interest levels, but likely higher than some bank lending rates, in the short to medium term as such investors should be looking for steady growth but relatively high dividend payments in the medium term. The falling interest rates on Jamaican dollar money market instrument will make the dividend payment very attractive source of income.
Sygnus Credit Investments is a specialty private credit investment company, dedicated to providing non-traditional financing to medium-sized firms across the wider Caribbean region. These companies typically have revenues between US$5 million and US$25 million.
The investment objective of the Company is to generate attractive risk adjusted returns with an emphasis on principal protection, by generating current income, and to a lesser extent capital appreciation, through investments primarily in Portfolio Companies using private credit instruments.
In 2017, the Company raised US$16 million in equity from 44 investors, with more than half the capital raised from institutional investors. The top 5 largest institutional holders invested $8.5 million and owns 52.9 percent of the Issued Shares. The fund raised was used to capitalize the company and invest in Portfolio Companies. The targeted investment types include bilateral notes and bonds, preference shares, asset backed debt, mezzanine debt, convertible debt and other forms of structured private credit instruments. These types of financing are typically more aligned with the growth and expansion plans of Portfolio Companies.
The company intends to pay out up to 85 percent of its net income as dividends to shareholders, payable on a quarterly basis. The target dividend yield is over 7 percent on the IPO price.
At December 2017, SCI had US$16.7 million in assets and generated net profits of US$660,855. The value of investment in Portfolio Companies was US$11.6 million, generating a yield of 10.3 percent.
Sygnus Capital Management, the Investment Manager, seeded SCI with US$540,000 and owns 3.4 percent of the issued shares. In total, Sygnus Capital Management and Sygnus related parties invested US$1.04 million and owns 6.5 percent of the Issued Shares.
Earnings for 2019 fiscal year could be around J$1-1.2 per share and that could send the stock to between $15 and $20 within twelve months. Returns could be greater if they use borrowed funds to meet some of the demand they have for funding. According to Jason Morris they intend to use borrowed funds once they have used up the equity now being raised. Book Value per Share was 10.5 US cents at the end of 2017.
Thirty-eight-point-nine percent of the fair value of the Company’s investment in Portfolio Companies was denominated in Jamaican dollars. For the period ending December 31, 2017, appreciation of the Jamaican dollar versus the US dollar resulted in Net Foreign Exchange Gains of US$247,705, this gain which flows through the income statement, may be reversed in future periods, and may affect Net Profit.
The Company currently has a robust pipeline of US$31.4 million in deals to finance, of which US$3.2 million has been approved, US$12.3 million has been mandated and US$15.9 million are at various stages of prospecting.
VM Investments 2 times over
December 13, 2017 by
Yet another Initial Public Offering crossed the line with demand exceeding supply as the latest issue by VM Investments to raise just under $700 million, has been oversubscribed and closed at the end on Tuesday.
“We were heartened by the overwhelming confidence demonstrated by Members of the Victoria Mutual family and the wider public. We closed today with subscriptions in excess of $2 Billion for the $689,261,487 offer” Devon Barrett, Victoria Mutual Group’s Chief Investment Officer said.
Barrett went on to say “we believe this augurs well for Jamaica’s economic growth and look forward to contributing to this growth by providing financing solutions for small and medium-sized entities in Jamaica. Details on the basis for allocation will be communicated to the Jamaica Stock Exchange in a subsequent advisory.”
Devon Barrett CEO of VMIL addressing invitees at the formal announcement of the IPO
A total of 225,003,750 Ordinary Shares in the Offer are initially reserved for staff and customers of the VMBS Group at discounts from $2.08 to $2.33 each and 75 million for the general public at $2.45 each. The offer which opens on December 11, was scheduled to close on December 18.
The company reported profit after taxes of $326 million, surpassing the $310 million made in 2015 and up to September profit of $273 million was achieved putting in on track for $360 for the year or 30 cents per share with PE ratio of 8, which is well below the average of the market 14.
Last week, FosRich and GWest closed with the issue oversubscribed and Wisynco closed with over $17 billion chasing a little more than $6 billion that was sought. Reports are that the Wisynco offer was heavily subscribed to by institutional investors.
Elite Diagnostics IPO Decemder 7
November 30, 2017 by
Information reaching IC Insider.com, is that the initial public offer for ELITE DIAGNOSTICS could come to market on 7th December 2017.
The 5 year old company provides imaging and Diagnostic Medical Facility offers services such as MRI, CT Scan, X-Ray, Ultrasound and Fluoroscopy. The Issue is expected to raise $160 million at approximately $2 per share with the shares to be listed on the Junior Market of the Jamaica Stock Exchange.
The proceeds from the offer will be used for expansion of the business. The company operates from Holburn Road in Kingston and now has a new office on Hope Road.
If the issue comes in as stipulated, it will make for 5 new issues officially on the market at the same time. If the issue is successful, it would raise the listings on the Junior Market to 38 assuming the FosRich offer is successful, with 34 of them being ordinary shares.
Other issues expected are, Wisynco and VM Investments that are heading to the main market of the Jamaica Stock Exchange and GWest for the Junior Market.
Fontana another IPO another set of errors
This is an unfortunate development for yet another issue, that seems very attractively priced. The directors have all signed off on the document that has gone through the Financial Services Commission, the Jamaica Stock Exchange and the Company Office of Jamaica, so why the errors and important ommission.
The introduction in the prospectus speaks to a price of $1.88 except for reserved shares at $1.69 but later on in the body of the document it speaks to a price of $2 for each share, making it unclear exactly what the price really should be? In the interim results to September, there are two issues, one is an error and the other, information that really needs clarification. The interim cash flow has no profit, nor depreciation and it therefore is not balanced and needs correcting.
The gross profit in the interim results jumped sharply,even as revenues grew just 5.5 percent with inventories are up 19 percent at the end of the quarter over 2017 and 15.5 percent over June this year. Why the big jump in inventories with sales are just rising moderately? Importantly, this raises questions about the accuracy of the inventory levels and the gross profit margin for 2018. Management should explain the sharp changes in this area so that investors can better understand why there is such a sharp jump in the quarterly profit.
This publication finds it difficult to once more raising issues relating to a prospectus. We are concerned that enough care is not going into them. The breach of GWest Corporation relating to the non-disclosure of information relating to an extraordinary meeting that was said to approve the issue of preference shares that was never brought to investors’ attention is fresh and has not been properly dealt by the regulators or the company. The regulators seem to have turned a blind eye to it. We need to raise the standards if the capital market integrity is the be enhanced.