Equityline Mortgage Investment Corporation a Canadian company is the latest company offering shares to the public to take up. MPC Caribbean Clean Energy IPO to raise US$50 million is currently opened with a price per share of J$130 or US$1 in the Trinidad market.
Equityline is issuing up to 5 million Series A preferred shares to raise US$10 million at a price of US$2 per share. With the opening of the issue set from December 10, 2018 and scheduled to close on December 31.
If the Invitation is successful in raising at the minimum capital of 2,500,000 shares is met, the shares will be listed on the Jamaica stock exchange. If fully subscribed to, US$9.4 million of the proceeds will be used to acquire a portfolio of mortgages.
The Corporation has specifically targeted investments in mortgages where the yield and other fees generated will enable it to pay out a cumulative monthly dividend at a rate of 8% per annum on the shares. For each fiscal year ending December, the Corporation intends to pay a surplus special dividend equal to the taxable income for that fiscal year and capital gains dividends equal to the Corporation’s taxable capital gains for that fiscal year, less dividends previously paid.
The Corporation was incorporated in January 2018 under the Business Corporations Act (Ontario) with the intention of qualifying as a mortgage investment corporation under the Income Tax Act (Canada). The Corporation has not undertaken any commercial activity since incorporation.
The principals behind the Corporation have a history of operating in the mortgage lending business in Ontario. The Manager believes that it has a specialized skill set in this sector of the mortgage lending market, and therefore has established the Corporation for the purpose of bringing those business skills to the public. The Corporation focuses its investments primarily in urban markets and their surrounding areas, which the Corporation believes are typically more liquid and provide less volatile security for mortgage loans. The Corporation focuses its investment in Ontario, however, the Corporation’s Asset Allocation Model permits the Corporation to invest in mortgages across Canada if the Manager deems it to be advisable. The Corporation intends to further grow its portfolio by periodically raising capital through equity offerings and using the proceeds of such offerings to fund additional mortgages generated through the Manager or other sources. As a MIC, when calculating its income tax payable in Canada, the Corporation may deduct dividends that are paid from income to reduce corporate income tax. The Corporation intends to pay out all of its net income and net realized capital gains as dividends with the result that the Corporation will not pay any income tax. To reduce its tax owing to zero, the Corporation may pay surplus dividends, after payment of all dividends on any Preferred Shares, at the end of the fiscal year. Taxable dividends, other than capital gains dividends, are treated as interest income to Shareholders for Canadian tax purposes.
Both IPO offers are more aligned with persons looking for income than for capital appreciation, the same could also be true for other energy based entities to come that have no expansion plans that will be funded by internally generated or borrowed funds.