As its initial public offering (IPO) closes today, Sygnus Real Estate Finance Limited (SRF) has gained acclaim with brokers recommending a buy, participate, hold, or market weight action to their clients.
The St Lucia-registered company is seeking a minimum of JM$3.9 billion to use in its robust real estate pipeline and rebalance its capital structure.
“This investment is suitable for investors with a medium to high-risk appetite who are seeking indirect exposure to the real estate sector”— JMMB
The IPO has been open since July 23 and will close at 4:30 pm. However, the company can exercise the option to upsize the IPO to JM$4.6 billion, with a price range from JM$17.90 (US$0.1170) for applicants in the reserved pool to JM$19.30 (US$0.1270) for the public.
Out of 13 reports from brokerage firms, Caribbean Business Report has seen nine with varying price ranges and stances. The lowest fair value price obtained has been from JMMB Securities giving a price of JM$18.97 (US$0.1224), while Cumax Wealth Management obtained a fair value of JM$26.84 (US $0.1750), which represents a potential upside of 28 to 33 per cent.
JMMB maintains a market weight stance has informed its clients to expect an exposure up to five per cent of their portfolio held with the company.
“This investment is suitable for investors with a medium to high-risk appetite who are seeking indirect exposure to the real estate sector,” the report stated.
Meanwhile, GK Capital Management has recommended SRF as a long-term buy with a fair value of JM$23.56.
Proven Wealth Limited’s report, on the other hand, estimates a fair value of JM$21.60 (US $0.1390) with an upside potential of up to 18 per cent. The recommendation was a buy for investors with an aggressive risk profile with a medium- to long-term investment horizon.
Proven also noted that the company has performed extremely well in a very short space of time and provides an opportunity for investing in a real estate financing vehicle through a relatively more liquid vehicle. However, the report also noted the cyclical nature of the real estate space and the liquidity of the shares, which tend to be held by institutional investors who buy and hold for the long term.
Co-lead broker Scotia Investments Limited obtained a fair value price of JM$20.76 (US$0.134), which it sees as fairly valued and should only be taken up by investors once it is aligned with their current portfolio and risk appetite.
On the outlook of SRF, the Scotia report stated, “Although it is still in its infancy, management’s track record signals that the team is experienced and highly competent in alternative investments and this should support the execution and achievement of the stated objectives. This is also underpinned by the expectation that interest rates will remain accommodative into the medium term continuing to support the current market appetite for residential real estate, while the non-residential side will likely recover in tune with the economy.”