Barita to grow investment banking with potential $13.5 billion APO

Barita Investments Limited is looking to raise between JM$9 billion and JM$13.5 billion in an additional public offer (APO) to open shortly.

Barita is looking to raise between $9 and $13.5 billion in an additional public offer that begins August 26 and ends on September 16.

The company revealed its intent in its prospectus yesterday, August 12, which see it offer up to 173,733,220 new ordinary shares  between August 26 and September 16, 2020.

The prospectus indicates that proceeds will be used mainly to increase investment banking capacity.

The offer includes the ability to upsize by inviting offers for an additional 86,866,610 shares in the capital of company.

“…we have seen growth across our core business lines, reflecting an expanding customer base, a focus on efficiency and the results of our efforts to grow and diversify revenues.”

– Chairman of Barita, Mark Myers

Proceeds of the APO will be used to increase the company’s investment banking underwriting capacity, to upgrade the technology platform to global platform and seed new managed funds and expand the product offerings.

It is also seeking retail footprint expansion, locally and regionally. The new funds will be used for working capital support to develop talent, brand and operating capacity to accommodate the existing growth trajectory.

Reserved shares in the offer total 160, 752, 450 units. The non-reserve allocation is 12,980,770 shares.

The offer ranges from JM$49 small investors; JM$49.75 for Hotel workers, Farmers and Civil Servants and JM$52 per share for Cornerstone Investors, Barita clients and investors in Key Investments and, finally JM$52 for non-reserve share applicants. Applicants must order a minimum of 300 shares, and above this amount multiples of 100 shares.

The company has market capitalisation of JM$48 billion. Shares last traded at $58 per unit.

Company chairman Mark Myers said, “Barita as a business continues to successfully navigate the challenges of the pandemic through our disciplined approach to risk and liquidity management, a robust business continuity plan, but also on the strength of our balance sheet.”

In 2019, the company raised J$10.3 billion in fresh equity capital.
Myers said management prudence has translated into “continuing to reflect best in class capital and liquidity ratios as seen in our financial results for the six-months ended March 31, 2020.”

Capital to total assets stood at 28.2 per cent relative to the regulatory minimum of 6.0 per cent which Myers said is, “indicative of our significant capacity to withstand the shocks of the COVID-19 pandemic.”

The profit outturn for the six months ended March 31, 2020, he added represents Barita’s highest net profit performance for this period in its history.

The Group reported net profits of JM$1.0 billion, a 95.9 per cent increase over net profits of JM$516.7 million for the corresponding, for the six-month financial year 2020.

Net profit for six-month FY2020 translated to earnings per share (EPS) of JM$1.24, relative to a restated JM$0.68 per share for six-month FY2019.

On a 12-month trailing basis, net profits of JM$2.2 billion were generated, resulting in a return on average equity of 19.9 per cent.

Myers said, “During the first half of Financial Year 2020 we have seen growth across our core business lines, reflecting an expanding customer base, a focus on efficiency and the results of our efforts to grow and diversify revenues.”

He stated that the easing of business activity during the pandemic has afforded Barita time to “diligently assess our success and growth over the first half of the Financial Year and we expect to pick up where we left off once restrictions on business activities are relaxed.”