New IPOS expected in October

The initial public offer of shares in Jamaica Fibreglass Products is expected to come to the Jamaican Capital market in October, our source advises, with Spur Tree Spices to come shortly after.
The company produces fiberglass based furniture and beddings, with revenues said to be in the region of $600 million, is expected to raise approximately $250 million for expansion purposes. The prospectus of the Metry Seaga owned company is said to be at an advanced stage of preparation and should be moving through the various stages for approval soon.
Spur Tree Spices, with revenues, said to be just over $1 billion, should also be coming in October, if all goes well, with a view to pull in $250 million. GK Capital are brokers of the two issues that are slated to list on the Junior Market. The prospectus of the company that has been manufacturing seasonings and sauces since 2006 for the local and export markets is also at an advanced stage of readiness, ICInsider.com gathers.
ICInsider.com is informed that the prospectus for one issue is in a draft form currently, so it should be ready to move to the regulators shortly. IPOS are subject to approval, primarily by the Jamaica Stock Exchange and Financial Securities Commission, before the prospectus can be released to the public as such, the exact timing is subject to signing off by them.
One source advised IC Insider.com that there are several potential listing candidates in the Manufacturing sector, with a number of them expressing interest in the listing. Another source advises that there are a number of potential listings in the NCB Capital Markets pipeline. The disruption to business caused by covid-19 is creating delays in some of the issues.
What appears to be a rush to list is a marked departure from the situation that existed before the advent of the Junior Market, with many business owners now seeing the major benefits that listings bring and the usefulness of long term capital.
In the meantime, Sygnus Real Estate Finance IPO that is seeking to sell 207.6 million up sizeable by 38.86 million units to raise a maximum of US$15 million, is extended to Friday, September 10.

High level of allocation for Fesco shares

Subscribers will get over 43 percent of the shares they applied for in the IPO of Future Energy Source, this will be one of the highest allocations in recent years for an IPO, but it may suggest a limited upside for the price initially.
Applicants in the General Public Pool receives 1,000 shares plus aroud 43.876 percent of the excess for they applied. The Brokers for the issue states that “multiple applications from the same JCSD account for each pool were combined and treated as one application for the purposes of allocation.
NCB Capital Markets receives its full allotment of 100 million shares. NCB Insurance Agency & Fund Managers Limited gets the full allotment of 16.245 million shares. The balance of shares in the Broker Reserve Pool of 58.755 million, which were not taken up, is transferred to the General Public Pool.
Key Partner Reserve Pool applicants will receive up to the first 250,000 shares plus approximately 80.195 percent of the balance applied for.
Applicants in the Employee Reserve Pool receives the first 50,000 shares plus approximately 72.32 percent of the rest.
Refunds for Applicants who did not receive allotment fully will commence April 14, 2021, NCB Capital Markets states.

Oversubscribed

Future Energy Source Company Initial Public Offer of 500 million shares, which ICInsider.com indicated last week should be snapped up quickly by investors, with the company having long-term prospects for strong growth, did just that, with investors snapping the shares within two days of the opening.
NCB Capital Markets, the brokers for the issue, reported on Thursday that the issue, priced at 80 cents per share and opened on Wednesday, closed on Thursday the Junior Market IPO issue was oversubscribed. The successful closure of the issue will see the listings of companies rising to 42 from the current 41 on the Junior Market of the Jamaica Stock Exchange.
The company that trades as Fesco reports earnings of $92 million before taxation for the period to December last year from revenues of $4.35 billion and is projecting pretax profit of $151 million for the year to March 2021 and $264 million for the 2022 fiscal year. The plant is for two new gas stations to be added to the current 14 before the end of 2021.

Fesco IPO opens next week

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Future Energy Source Company (Fesco) initial public offer of shares will open at 9 am on Wednesday, March 31 and close on April 9, at 4 PM, unless it closes earlier.
The issue comprises 300 million new shares with 200 million to be sold by existing shareholders at 80 cents each. If successful, the total issued shares will be 2.5 billion, with the shares slated to list on the Jamaica Stock Exchange Junior Market.
The projection shows a profit of $151 before taxes for the year ended March 2021 from revenues of $7 billion and earnings per share of 7 cents. The company forecast revenues of $106 billion and a profit of $264 million or 10.5 cents per share for 2022.
ICInsider.com had earlier done a detailed review of the offer and rated it a buy with long term growth prospects as there is much room for expansion as it currently has only 14 service stations under its banner. NCB Capital Markets is the lead broker.

IPOs are back the Tropical issue

Just when investors thought COVID 19 had killed off IPOs for this year, suddenly pops up, Tropical Battery‘s long-promised initial public offer. The prospectus for the issue is now available to the public.
The issue for 325 million ordinary shares at $1 each of with up to 187.5 million units reserved for priority applications, opens September 22 and is scheduled for closing on September 30, subject to the right of the Company to close it earlier.
The Company intends to apply for the shares to be listed on the Junior Market of the Jamaica Stock Exchange, subject for at least $260 million being raised, by way of this invitation.
The total issued shares following the offer will be 1.3 billion units, with the parent company owning 75 percent. That will allow enough shares to be in the public hands to facilitate adequate liquidity in the stocks for some time.
The Company generated profit before tax of $87 million from revenues of $1.74 billion in 2019, a decent increase of 18.6 percent higher than in 2019 and a pretax profit of $45 million from revenues of $1.47 billion in the prior year, to September or 8.6 percent above the 2018 sales.
Gross operating revenue for the nine months to June this year increased nine percent to $1.36 billion from $1.25 billion in 2019, with profit before taxation falling from $67.6 million to $62 million.
Future growth, the Company says, “will come primarily from the addition of new product lines, i.e., Renewable Energy Batteries, Oils and Lubricants, Tyres, etc., organic growth of existing products, expansion and the renovation of our retail stores.”
The proceeds of IPO will be split equally between the selling shareholder and the Company, resulting in $162.5 million going to each, net of cost.
The Company plans to use the amount collected for expansion and working capital purposes, including but not limited to new product lines, expansion and renovation of retail stores, including an expansion of the parking area at the retail store at Grove Road in St Andrew. Completion of the buildout of and relocating to the new warehouse, head office and retail store at Ferry, Acquiring and install information technology systems for greater efficiency and improve customer experience and expansion of Mobile delivery fleet of vehicles.
Total shareholders’ equity at the end of June stands at $593 million, while our long term liabilities fell by to $315 million with the total interest-bearing debt of $415 million. The Company is owed $190 million by a related party and is interest-free, but payable on demand.
With earnings per share around 7.7 cents, the stock is priced around a PE ratio of 13 times 2020 earnings, leaving little or no room for short term gains.
NCB Capital Markets are the brokers for the offer. Unfortunately, for investors, there are no forecasted earnings included in the prospectus to help to guide them. This practice leaves a lot to be desired and it is fulltime, the authorities step up to the plate and ensure that all prospectuses include forecasted data for a least three years. That is not asking too much in the drive to build a developed capital market.

Transjamaican Highway IPO highly overvalued

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.

QWI Investments list on Monday

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 IPO oversubscribed

NCB Capital Markets advised that the invitation for subscription of 600 million shares with an option to upsize to 900 million units by QWI Investments closed on Wednesday morning.
The share offer was by way of a prospectus dated September 9, 2019, in respect of ordinary shares at the price of $1.35 to the general public, with shares reserved at discounted prices of $1.20 and $1.25 for some investors. The issue attracted more than 4,134 applicants but more than 4,550 applications for an estimated $1.5 billion at an interim count stage with a number of persons who wanted to buy in not being able to do so. With the level of oversubscription, the company exercised the option to upsize the issue to 900 million to raise just under $1.3 billion.
QWI Investments is an investment company that will be added to the JSE Financial Index JSE sources say.
IC Insider.com is reliably informed, that there are two pending IPOS coming to the market soon. JMMB Group and the Lumber Shop both sought and got approval from shareholders to arise added capital and these could be the next two to come but Tropical Battery should not be far off. There could be two others before the year closes.

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.

5 hot summer IPOs

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.