Caribbean Assurance Brokers Limited is looking to raise just over J$100 million in an initial public offering on the Junior Market of the Jamaica Stock Exchange (JSE).
The insurance brokerage firm said it will offer up 52.5 million ordinary shares at a subscription price of J$1.91 when the IPO opens on February 18, according its prospectus shared Friday. Shares will be available in multiples of 100 with a minimum purchase of 1,000 shares up to March 3 or if fully subscribed sooner.
The 15-year-old company hopes to raise J$100,275,000 million from the listing and to benefit from the enhanced public profile a listing is likely to bring.
Of the total shares that will be on offer, 8,137,500 will be ordinary shares made available to the general public at the listed unit price. The rest are reserved shares, available at the listed price and broken down as follows: 6,300,000 shares for a select number of directors of the company (Company Reserved [Director]); 5,775,000 million for a select number of staff members of the company (Company Reserved [Staff]); 27,037,500 shares for a select number of longstanding clients of the company (Key Partners); and 5,250,000 for clients of the lead broker (Mayberry Client [Reserved]).
“If any of the Reserved Shares are not fully subscribed, then the excess shares shall first be available for subscription by the other Reserved Share Applicants on a pro rata basis according to the respective limit of their Reserved Shares. This process would be repeated until all applications for Reserved Shares are fully satisfied. If any the Reserved Shares remain unsubscribed after being offered to all Reserved Share Applicants then the remaining Shares shall be available for subscription by the general public,” the company said.
Other benefits the company hopes to reap are getting access to the capital market to enable it to fund growth through equity rather than debt, increased staff retention by providing it with an opportunity to get a stake in the company, and benefit from the tax incentives granted to companies listed on the JSE’s Junior Market.
For the nine-month period ended September 30, 2019, Caribbean Assurance grossed revenues of $336.1 million compared to J$328.1 million in the same period of the previous year. However, operating profit for the period dropped 17.95 per cent year-on-year from J$93.4 million to $J76.6 million. It said a finance cost of J$5.3 million compared to $1.6 million the comparable period, from an increased additional loan for a mortgage from Bank of Nova Scotia was partly responsible for the dip. Other factors contributing to the drop are changed commission rates for agents and increased taxation.
Caribbean Assurance’s indebtedness to banks, financial institutions and other lenders stood at $91 million at the end of the last calendar year.