Alliance Financial targets expansion with IPO

Cambio and remittance provider Alliance Financial Services Limited is offering for sale up to 1,252,294,335 ordinary shares at $1.59 per share.

Of the amount, up to 751,376,600 shares are reserved for priority applicants.

Brokered by JMMB Securities Limited, the company says all transactions will be done electronically. The offer opens on December 28 and is expected to close on January 11, 2021.

The company hopes to raise in the region of $1.9 billion dollars and – subject to raising a minimum $1.5 billion – will be seeking to list on the main market of the Jamaica Stock Exchange.

Alliance says in its management discussion and analysis in the prospectus that it is in discussions with several entities to expand its sub-agent network locations.

It was noted in the prospectus, “It is anticipated that the network will increase from sixty-six to over one hundred locations by the end of the second quarter, 2021.”

It was also noted it continues to look at other opportunities in the remittance space as it examines the possibility of partnering with other international remittance companies.

In 1996, Peter and Robert Chin, the founders, began establishing what would become several companies under the “Alliance” brand.

During its sixteen years of operation, Alliance Financial Services Limited has grown to become a provider of cambio and remittance services in Jamaica.

The company has its head office at 7 Belmont Road in Kingston and has four branches across the island, the most recent of which was established in August 2019 at the Portmore Mall in St Catherine. The other branches are located in Liguanea, Mandeville and May Pen.

It also has a sub-agent network numbering 66, distributing remittances under the MoneyGram brand.

Alliance Financial, for the year ended September 30, had revenues of $1.47 billion on which it made net profit of $709.3 million.

This compared to revenue of 1.67 billion at September 2019, on which net profit was $782.68 million.

The company, which was originally incorporated in 1996 as Alliance Capital Limited, is a licensed securities dealer that offers asset management, securities trading and financial advisory services.

Alliance Finance Limited was formed in 2012 and provides insurance premium financing to corporate and retail customers through a working arrangement with several licensed insurance brokers. It also provides credit facilities to customers.

In 2004, Alliance Financial Services Limited was incorporated to take over the cambio services business that was then being operated by Alliance Investment Management Limited.

Directors of the company, in their letter attached to the offer in the prospectus, said that the success of the Company is demonstrated in “a history of strong financial performance.”

They outlined that during the period 2016 to 2019, the company achieved a compound annual growth rate in revenues of 11.60 per cent, while net profit after tax during the same period grew at a CAGR of 38.93 per cent.

The company’s return on average equity also improved from 49.38 per cent in 2016 to 54.80 per cent in 2019.
The directors said that due to the effects of the COVID-19 pandemic on business and tourism activity, the company’s revenues and profits declined by 12.15 per cent and 9.38 per cent respectively in FY2020 compared to FY2019.

They commented, “We consider the company’s FY2020 results to be exceptional given the circumstances under which it operated in FY2020 and underlines the strength of the Company’s diversified cambio and remittance business model. We expect that the company will return to its growth trajectory once the effects of the COVID-19 pandemic have abated and normalcy is restored to the global and Jamaican economy.”