The latest initial public offering of shares QWI Investments was approved for listing on the main market the Jamaica Stock Exchange on Friday and will be listed on Monday.
The offer of shares was initially for 600 million units but was upsized to 900 million after the issue was oversubscribed. The issue saw more than 4,000 applicants applying for more than 1.6 million shares and pulled in just over $2 billion with more investors who never caught the IPO wanting shares.
As a result of the oversubscription, applicants from the General Public received the first 100,000 units plus 31.2188 percent of the excess applied for. NCB Capital Markets and Directors of QWI Investments get the full allotments. All other applicants got a portion of what they applied for with a minimum of 76,000 units for applicants in the Jamaican Teas and KIW International pool.
QWI Investments list on Monday
QWI IPO opens next week Monday
QWI Investments, a recent start-up investment company’s initial public offer of shares opens on Monday, September 16, with the sale of 600 million units.
The company has the option subject to the Financial Services Commission, to upsize the amount to 900 million shares if demands warrant it. Shares are being offered to the general public, at $1.35 each.
The amount expected to be raised is $787 million from the 600 million shares but could rise to just under $1.2 billion if the company upsize the issue to the maximum permissible.
The investment objectives of the Company is to invest primarily in securities of companies listed on the Jamaica Stock Exchange and on other recognised overseas stock exchanges with a medium to long term investment horizon to provide attractive risk-adjusted returns, with diversification across industries and regions. The portfolio will be actively managed on an ongoing basis guided by the investments team.
The company, currently a subsidiary of Jamaican Teas, really started operations towards the end of March when it acquired the quoted shares, from KIW international and Jamaican Teas amounting to $465 million. Since then it has grown the net assets by 52 percent to $705 million after accounting for operating expenses, well ahead of growth in the JSE composite Index over the same period. The performance equates to earnings per share in the period of 51 cents. At the end of July unaudited placed the net asset value at $1.52 per share.
Of the 600 million shares on offer, 270 million units are set aside for the general public. 115 million shares each are earmarked for NCB Insurance Company and NCB Capital Markets. Shareholders of Jamaican Teas and KIW International on record on 16 September 2019 can buy up 45 million shares at $1.25 each per share. Directors of the group and customers have 55 million units set aside at varying prices.
QWI had quoted shares amounting to $899 million at the end of July and current liabilities of $188 million. The closing date for the issue is set for 30 September but could be extended if market conditions demand it.
The QWI board is chaired John Jackson, John Mahfood, Cameron Burnet, all Chartered Accountants, Carl Carby, Management Accountant, David Stephens, Investor and business owner and Malcolm McDonald, Attorney at Law.
The shares are to be listed on the main market of the Jamaica Stock Exchange. NCB Capital Markets are the brokers to the issue and will be using their electronic portal to process all applications, which should allow for speedy processing of applications.
Persons involved in preparing this story, are connected to QWI investments.
100th listing coming for JSE
The Jamaica Stock Exchange is set to continue to grow with an increase in listings continuing with more than 100 listings being achieved in 2018 for the very first time.
More trading activity is expected in the future as a result of new listings, and the impact of the fall in interest rates will have, on trading activities. The exchange now has 92 listings, with a few duplicated ones, in the main market and US dollar market will see and there could be four on the exchange suggest before the year ends with three of them regarded as definite. Brokers say they are working on 8 new ones for 2018 currently, Marlene Street Forrest, Managing Director of the Jamaica Stock Exchange advised IC Insider.com.
The three are expected to be GWest, a medical complex out of Montego Bay, that is expected to raise over $400 million, the company’s income will come from a combination of rent, from the major part of the complex and fees from operating a small short term medical facility. The complex currently has a number of blue chip clients as tenants. Wisynco Group is looking to raise for itself $1 billion but some of its current shareholders wanting to cash out. Information suggests that shares are to be offered to a wide array of persons including the 700 staff members as well as a large number of customers hence the shares from the IPO could be pretty scarce. FosRich Group of Companies. Caribbean Insurance Brokers that is being handled by Mayberry Investments, is the fourth possible 2017 listings. Mayberry Investments has been working on Neveast Supplies but this seems to be a 2018 listing.
GWest complex in Montego Bay, its IPO is expected soon.
Others that should see their ordinary shares listed on the Jamaica Stock Exchange include, Jamaica Plumbing and Supplies, the government’s owned Wighton Wind Farms, Jamaica Public Service Company, with the government wanting to dispose of its share in the power company, KIW International that has taken the decision to have the shares relisted, in preparation for this the company approved at its recently held annual general meeting, a 15 for 1 stock bonus to bring the issued ordinary share capital to just over $50 million. UCC Online, a segment of University College of the Caribbean was expected to have gone to the market this year but have been ironing out issues to facilitate the initial public offering, they could be ready in 2018 and Sygnus Capital Investments should list in the first quarter of 2018, probably by February, on the main market of the stock exchange. Sygnus is a relatively new company, established to undertake loans or make medium term investments in medium size businesses. The company which is registered in St Lucia will be managed by Sygnus Capital Management, a Cayman Island based corporation. The company raised US$15 million in capital and is aiming for another $5 million when they come to market, which could be as early as January next year. According to our source they have so far lent out US$11 million and generated a higher rate of return that originally expected. The company has a good stream of potential users of its funds.
The Ciboney waste
Ciboney has just released another disappointing set of results for the nine months to February this year, with cash funds erosion continuing with $7.8 million being burnt from a year ago, as the company reported a loss of $2.8 million in the third quarter and $6.2 million in the nine months period. The above numbers may not appear large, but when viewed against revenue and foreign exchange gains of only $770,000 for the year to February and cost of $7 million then a better picture of things is seen.
Minority shareholders in Ciboney should demand that the directors restore the lost value in the company since 2013. At the end of February 2013 Ciboney cash and investments was $31.6 million today it nowhere close, as cost and poor investment decisions eroded it, it never had to be that way. In 2013, the company got an offer to merge with KIW International and turn the combined entity into an investment company with a proposal to go to the market in 2016 to raise funds for expansion and modernization of the KIW complex, in light of what is seen as increased business to come from port activities in Kingston. The matter was discussed formally with the Cibnoey’s board, but there were no further response from them although they did indicate that they would need to advertise the company for sale to comply with government’s divestment requirements.
Rules on mergers and takeovers of the Jamaica Stock Exchange suggest that the directors may have personally breached them. Relevant extracts from the rules state “At no time after a bona fide offer has been communicated to the Board of an offeree company or after it has reasonably come within the contemplation of the Board of an offeree company that a bona fide offer is likely to be forthcoming, shall any action be taken by the Board of the offeree company in relation to the affairs of the company, without the approval in general meeting of the shareholders of the offeree company, which could effectively result in any bona fide offer being frustrated or in the shareholders of the offeree company being denied an opportunity to decide on its merits.”
“A Board, so approached, is entitled to be satisfied that the offeror company is, or will be, in a position to implement the offer in full. When any firm intention to make an offer is notified to a Board from a serious source (irrespective of whether the Board views the offer favourably or otherwise), shareholders must be informed without delay by press notice.”
A few questions flow, especially in light of the near wiping out of the company’s cash. Why was there no formal response and why weren’t minority shareholders advised of the proposal? Recently other entities have made offers to Ciboney but minority shareholders have not been advised of them. Did the Ciboney board seek independent outside advise on the offer?
The proposal made to Ciboney included the following, Ciboney which is listed on the JSE has been recording losses consistently for years (with accumulated losses of $417 million). KIW which was once listed has been making small profit for the last three years to 2012 and appears to recording an increase in its 2013 fiscal year. The combination of both entities could result in positive profit, helping to restore greater level of interest in the stock and boost the KIW shareholders’ value as well.
KIW is proposing that both entities consider merging with a plan to raising fresh capital in 2016. A crude calculation shows that the company is worth approximately $150m, of this amount Finsac shares are worth $90m and the minority $60m. The Finsac debt could therefore be satisfied by the transfer of the property to them and by cancelling the shares or transferring them to minority shareholders.
KIW has about 3 ½ acres of land, a few investments in unit trust and stocks. There are buildings on the property which are rented presently providing rental income.
The facilities which is located close to the port, stands to benefit from expected surge in port activities that are planned for with the expansion of both Kingston Wharves and the Port Authority’s port.
Currently, the company is debt free and has about $14 million in cash and investments. The property is on the books at a value of $55 million but would be valued up to $105m.
If the above proposal was implemented, the combined entities would be worth approximately $115 million with the KIW shareholders having the majority of the shares. It could generate approximately $20 million in revenue in year 1 and profits of around $10m, not taking into account the impact of any new capital that may be raised.
Since that proposal was sent, Ciboney has lost $24 million in value while KIW has increased theirs to by around $30 million not factoring any increased value for the property that may have accrued since 2013. So Ciboney’s minority shareholders have lost out on improving their value by $40 million and as high as $100 million in increased value.
The question is with cash fast disappearing what will be the future of Ciboney without any viable offer to purchase the land owned by the company?
