Several companies aim for Christmas listings, capital raises

With the equity market devoid of company listings and general capital raises for the majority of 2020, several firms should be engaging in initial public offerings (IPO) and additional public offerings (APO).

This may lead to the largest December capital raise in modern history since the historic $7.48 billion raised in 2017 and possibly higher than 2019 which totalled approximately $18.28 billion among 11 companies (12 listings).

Due to the fallout caused by the novel coronavirus pandemic, the 16 projected IPOS which were expected in 2020 have only materialised for four companies so far as several firms stepped back from the consideration of going public due to the uncertain environment. Because of the reduced economic activity and financial impact, there is limited scope on what the new year may bring as the local equity market remains down by 23 per cent. However, several listed companies on the Jamaica Stock Exchange (JSE) have gone for capital raises in the forms of APOS and rights issues.

Barita Investments Limited remains the only firm in 2020 to execute a successful APO with Proven Investments Limited returning with a new APO after closing their first one due to the downturn in the equity markets.

Seven other companies indicating their intent to go through an APO, only Sygnus Credit Investments Limited and Derrimon Trading Limited (DTL) have made their intent clear to execute their capital raises before 2020 comes to a close.

Sygnus is currently aiming to raise a minimum of US$50 million ($7.4 billion) which is up from the initial US$20 million ($2.96 billion) announced late last year in an attempt to grow their investment portfolio.

Despite DTL not discussing the details beyond the intention to issue 1.8 billion new shares, it’s expected that the company could possibly raise up to $4.8 billion based on recent market prices. Sterling Investments Limited (SIL) had gained approval from shareholders in early August for their APO but has remained silent on the offer while their share price continues to grow. SIL’S offer could easily yield anywhere from $2.5 – $3.7 billion based on the 1 billion of new units to be issued.

Although Key Insurance Limited hasn’t confirmed an exact timeline on the completion of their renounceable rights issue, a release on the JSE for a record date of December 10 sent the stock price flying by 17 per cent with a peak of $10.50 on last Friday’s trading session. Key’s rights issue could see the struggling company source at least $1.04 billion or even more depending on if the Grace kennedy controlled subsidiary decides to issue more shares in the offer.

Due to Tropical Battery’s successful IPO in late September and general confidence returning, several brokerage firms have been upgrading their online IPO platforms and have increased their advertisement spend which has been a hint of things to come shortly.

Industry insiders expect some of the companies coming to market to garner great support as institutional investors gear up to deploy funds into new investments with the fourth quarter nearing an end. The record set in December 2017 saw Gwest Corporation, Fosrich Limited, Victoria Mutual Investments Limited and Wisynco all list at the same time with the latter gaining an oversubscription in one week totalling $18.9 billion.