Port Authority recruiting broker to list BPO assets; IPO by year end
THE PORT Authority of Jamaica, PAJ, is transferring its outsourcing assets to a new company that’s to be divested via the stock market and is hunting for a broker for the listing.
The state regulator of ports got the goahead from the government last October to set up an enterprise team for the divestment that was first announced two to three years ago and is now looking to select the broker within two months, that is, by May. Thereafter, the selected firm will have seven months to arrange for the listing on the Jamaica Stock Exchange or “otherwise complete the privatisation”.
The company to be listed is yet to named. For now, it’s being referred to as ‘Newco’. The timelines laid out indicate that PAJ wants the entity to start trading on the market by around December. That would be preceded by an initial public offering of shares for subscription by market investors.
The Port Authority owns 611,562 square feet of BPO, or business process outsourcing, space and manages another 240,714 square feet of space on behalf of the Factories Corporation of Jamaica. The assets are located in designated special economic zones in Montego Bay and the Portmore Informatics Park.
Newco will become the new conduit for that business, as well as the vehicle for the PAJ assets. In all, the new company will have around 852,276 square feet of rentable space under management.
Factories Corporation will continue to own its BPO assets.
The divestment of the BPO operations via the JSE would become the third listing of a government asset in recent times, the latest of which were toll road operator TransJamaican Highway in 2020 and renewable energy producer Wigton Windfarm in 2019.
Those transactions were brokered by NCB Capital Markets and Mayberry Investments, respectively.
For the BPO transaction, Port Authority is seeking a broker with a track record of at least five IPOs or sale transactions worth $3 billion and more.
PAJ said that for close to 40 years, it’s been central to the setting up of Jamaica’s outsourcing sector, through various cycles and changes – from the garment industry in the 1980s, to free zones, call centres, and now the current movement towards knowledge process outsourcing.
“The BPO industry is now significantly de-risked, as evidenced by the increasing investment by the private sector,” the state agency noted.
The Port Authority’s BPO assets are valued among its estimated $82 billion in total assets, but their size have not been disclosed, neither in the Jamaica Public Bodies report nor the PAJ’s annual report.
The Montego Freeport-based Montego Bay Free Zone Company Limited, which is owned by PAJ and included in the divestment plan, holds $2.4 billion in assets. The company was projected to make a loss of $330 million on revenue of $860 million at year ending March 2024.
The assets of St Catherine-based Portmore Informatics Park are consolidated with that of Kingston Free Zone Company Limited, based on the Jamaica Public Bodies report published by the Ministry of Finance. Kingston Free Zone holds assets of around $4 billion. It is expected to make a loss of $165 million on $745 million in revenue at year ending March.
Port Authority, meanwhile, is projecting a profit of $4.1 billion this fiscal year, up from $3.6 billion.