May 2008 Financial News

Jamaica Stock Exchange (JSE) preference offer to open May 16

May 09, 2008

The Jamaica Stock Exchange (JSE) in one week will offer preference shares to the market, with the dual intent of raising capital while presenting investors with a clear sign that the organisation was now demutua-lised and serious about going public.

The offer, priced at $2 per share, is targeting take up of 33 million shares to raise $66 million of equity for the exchange.

The exchange is currently capitalised at $928 million, and has assets of $1 billion.

The placement on which NCB Capital Markets is lead broker and arranger, is on May 16 to 30.

The prefs taken up under the offer will be listed, said JSE General Manager Marlene Street-Forrest, adding that in two years, the exchange will head back to the market with another offer of common stock.

The exchange was formalised as a 'for profit' entity in April, when its regulatory functions were split off from its commercial arm.

Before that, the exchange had revised and adopted new articles of association and memorandum of understanding, created new share capital and distributed to its dedicated former owners.

Profitable entity

As a mutual company, the JSE was owned by its 11 member stockbrokerages, which had seats on the exchange.11 seats have been exchanged for issued shares.

The JSE is a profitable entity, reporting $44 million of profit in 2007 to recover some ground on the $8 million made in 2006. Still, the company has more ground to make up, to get back into striking distance of the $114 million net income made in 2005.

"The planned listing of the exchange's securities follows on a commitment made to the market," said Street-Forrest.

The JSE last month completed its reorganisation under which its commercial arm, now run by Street-Forrest, was divorced from its market regulatory division and placed under Wentworth Graham's supervision.

That reformulation, Street-Forrest said, finalised the process of demutualisation.

The JSE continues to oversee the market and listed companies - ensuring compliance with market rules and meting out sanctions when breached - but won't be allowed to regulate itself.

That job will fall to the Financial Services Commission (FSC) once the JSE prefs are publicly listed in June, deepening its watchdog role over the exchange.

"Oversight regulation for the exchange as a listed company will come from the FSC in the event that there is a conflict, whereby the exchange fails to comply with all the various requirement of a listed company," said Street-Forrest.

"Therefore, if the exchange fails to submit financials on a timely basis the market regulatory committee will refer this to the FSC to be dealt with."

The FSC already has oversight of the exchange, as an organisation operating within the securities industry, which it regulates.

The Securities Act gives the regulator various powers including, the right to object to a change in the exchange's rules, the right to approve persons appointed to the board of the exchange, the power to enforce the rules of the exchange and to suspend trading in a listed stock.

The exchange as a listed company will be guided by the same agreements and rules that govern all other public companies, including the reporting of quarterly and annual financial statements, and disclosure of information to the market on any material events.


Source:
Sabrina N. Gordon, Business Reporter
sabrina.gordon@gleanerjm.com
Jamaica Gleaner
Friday May 9, 2008

http://www.jamaica-gleaner.com/gleaner/20080509/business/business8.html