FESCO IPO oversubscribed

NCB Capital Markets Limited, the broker for the Future Energy Source Company Limited (FESCO) initial public offer (IPO) says the invitation was oversubscribed and, as a result, closed early on April 1, 2021. 

“The basis of allocation will be communicated later,” the broker also stated in the Jamaica Stock Exchange notice.

FESCO is a Jamaican-owned fuel distribution company that invited applications for its IPO, which opened on March 31 and should have closed on April 9, 2021.

FESCO opened its first branded service station in Mandeville (Heaven’s FESCO) and since then has grown to fourteen branded service stations islandwide. (Photo: Jamaica Observer)

“NCB Capital Markets Limited and FESCO would like to take this opportunity to thank the investors for their overwhelming support of the Offer,” the notice read.

IPO particulars

In late March, FESCO issued its initial public offer for subscription for 300 million newly issued ordinary shares priced at JM$0.80 each and sale of 200,000,000 existing ordinary shares by the selling shareholders priced at JM$0.80 each.

The company was targeting JM$400 million in new capital and funds.

The company, in its prospectus, said it will use proceeds of the IPO to support the growth of the existing businesses of the company, allow the company to pursue strategic investment opportunities, and pay the expenses of the invitation.

However, proceeds from the shares being sold by the current shareholders will accrue to the benefit of those selling shares and not to the company. 

Next move

In 2014, FESCO opened its first branded service station in Mandeville (Heaven’s FESCO) and has since grown to fourteen branded Service Stations islandwide. 

Hugh Coore, vice chairman, FESCO; Trevor Barnes, director, FESCO and principal of FESCO Bodles; Jhanelle Barnes, manager and principal of FESCO Bodles; Junior Williams, director, FESCO; Kerine Holness, client relationship manager, Scotiabank; Jeremy Barnes, CEO, FESCO and Principal FESCO Bodles cutting the ribbon at the official opening of FESCO FYC Supermarket in Bodles, St. Catherine, Jamaica (Photo contributed by FESCO)

The prospectus indicates that the company plans to open two additional service stations — the first at Ferry on Mandela Highway this month and the second at Beechwood Avenue, St Andrew in June of 2021.

The new stations should benefit from significant traffic volumes due to their locations along the Half-Way Tree corridor as well as the Mandela Highway.

FESCO markets transportation fuels E10 87, E10 90, ultra-low sulphur diesel, diesel, and LNG for transportation (estimated 2021); lubricants, coolants and chemicals; beverages including water; cooking gas (LPG) (estimated 2022/2023).

The company’s current market share for transportation fuel is approximately 4.65 per cent (April 2020 – September 2020) and it should increase to 5.3 per cent by May 2021 and 7.0 per cent by December 2021.