E-commerce and logistic company, Mailpac Group Limited (MGL) will offer 500 million shares in its initial public offer (IPO) which opens on November 22, 2019 and closes on December 6, 2019.
The share price will be J$1.00 per share with a minimum purchase of 10,000 shares. Broker, NCB Capital Markets, will acquire 250 million of the shares on offer.
Part proceed from the IPO is intended to pay down J$263 million worth of debt and to fund further expansion of the company. The team at MGL, led by executive chairman Khary Robinson, believes the company is on the verge of leading an e-commerce revolution in Jamaica. In the prospectus, it reports, “While online shoppers in Jamaica have jumped from an assumed 0.2 per cent of the adult population in 2010 to approximately six per cent today, this is a far cry from the penetration rates seen globally. A recent study shows that 76 per cent of the US population shops online today,” he said. “Accordingly, we believe that the business has only begun to scratch the surface of the opportunity it has in serving the country’s e-commerce needs.”
According to the prospectus, MGL will distribute 75 per cent of its net profits to shareholders as dividends. And the financials show that the businesses acquired show a strong performance before being acquired by MGL. The prospectus notes, “More specifically, in 2018, revenues were J$969. million and J$851.4 million for the first three-quarters of 2019. Net income for the same periods was J$213.1 million and J$203.1 million, respectively. It should be noted that Mailpac Local Limited only operated for seven (7) months in 2018 and, as such, only sales for that period was included. With a relatively static SG&A cost, the company’s margins are only expected to grow as the company’s record revenue growth continues.”
MPC has a client base of over 50,000 consumers and companies in Jamaica. Further, MGL is headquartered at 109 Old Hope Road, Kingston 6. In addition to the headquarters, MGL also has an additional ten locations around the island.
MGL is a recently incorporated company that acquired the businesses, including all the assets and liabilities utilised for operating purposes, of Mailpac Services Limited and Mailpac Local Limited. MGL also acquired the debt owed by Mailpac Services Limited to Norbrook Equity Partners. The purpose of the acquisitions was to amalgamate both ecommerce platforms into one efficient operating business. The acquisitions were executed to ensure the core operations of both companies remain but benefit from the economies of scale and synergies in being one operating company.
In 2010, Norbrook Caribbean Investment Company (the predecessor to Norbrook Equity Partners Limited), an investment holding company founded by Robinson, approached the owners of Mailpac Services Limited and proposed an acquisition. Amazon, which started just a year before Mailpac Services Limited, had already grown to US$25 billion in revenue and showed no signs of slowing down. The expectation was that this level of explosive growth in online shopping would inevitably take hold in Jamaica. Accordingly, NCIC acquired the business with the goal of enhancing the capacity of the platform for what was to come.
After seven years of expanding Mailpac through various infrastructural and technological enhancements, Norbrook leveraged its ecommerce expertise to establish Mailpac Local Limited – a separate ecommerce business serving local retailers that wanted to sell to Jamaican consumers. Led by a separate management team, the company built its customer base by delivering goods bought on its website from local providers such as PriceSmart, Hi-Lo and Stationary Centre.
There was significant development across both platforms and over J$263M of investments in infrastructure, technology and service offerings of the acquired businesses (funded through two separate financings provided by Norbrook, one of which imposes strict debt repayment rules around IPO proceeds).
Accordingly, MGL was established and started formally trading on September 30, 2019. The Company offers ecommerce fulfilment services from the United States to Jamaica (under the brand Mailpac Services), cross-border online shopping with local landed prices (Mailpac Marketplace), local online shopping and delivery from local retailers (Mailpac Local), online shopping financing (Mailpac Financial Services), a branded MasterCard for shopping online (Mailpac Card), sea freight (Mailpac Ocean Freight) and brokerage services.
MGL is the largest e-commerce and logistics company locally measured by its eleven locations and island wide delivery service.