Dec 2010 Financial News

JMMB's new preference share offer provides investment opportunity

Dec 17, 2010

Projects 15 % growth in profitability within the next three years

Jamaica Money Market Brokers (JMMB) has announced its 2011 preference share offer with a tenure of five years and with special features designed to reward client loyalty.

On Wednesday evening, at the institution's headquarters on Haughton venue in Kingston, JMMB's CEO Keith Duncan announced the offer of two tranches of preference shares, tranche 1 designed for JMMB's current shareholders and existing clients as at December 2, with an offer rate of 8.75 per cent per annum and priced at $3.00 per share. Tranche 2, available to the open market, offers 8.50 per cent per annum and is priced at $3.50 per share. Both tranches pay interest monthly. The minimum investment in each tranche is 10,000 units priced at $30,000 for tranche 1 and $35,000 for tranche 2. The offer opens January 3, 2011 at 9 am and closes January 7, 2011 at 4 pm, though with significant take-up, the offer can close before.

JMMB Group CEO Keith Duncan, announces the company’s preference share offer of 8.75 per cent and 8.50 per cent, 5 year fixed income investment, which opens January 3, 2011. Seated is manager, Group marketing Imani Duncan. The launch was held at JMMB’s Haughton Avenue head office on Wednesday evening. (Photo: Bryan Cummings)

Imani Duncan, Group marketing manager said the offer was developed as per JMMB's mission to provide investment opportunities to the average Jamaican.

"JMMB has been long committed to meeting our clients' needs. When we develop products we try to do it with our clients' feedback and so in designing something for them we tested it to find out what would be attractive for them and meaningful to them from their own outlook on the environment at this time," Ms Duncan said.

Keith Duncan was confident that the offer, which he characterises as competitively priced, would receive a similar reaction to that of the company's 15th anniversary preference share offer which was oversubscribed. Two of the three tranches in that issue, which raised $2.5 billion, matured December 14 and have been fully paid out. The third tranche matures February 4, 2012.

"We do have a significant amount of clients who purchased our 15th anniversary offer and they will be looking to buy this investment. We expect that they will take up their original investments and more.

We have the largest retail base anywhere in the Caribbean and they have always been loyal to our products. We do anticipate that on the corporate and institutional side there should be some level of take up. So we do expect that we will be oversubscribed on this offer in a significant way," Keith Duncan said.

"One of the major features of the preference share offer of 2007 was the predictability and stability of cash flows. Clients were able to plan, put their pots on fire for that monthly return that they received and this was a really differentiated feature for clients and one that they know is important to them and this is what we are trying to replicate going forward," he added.

In addition to the steady monthly cash flow, and the minimum investment that places the offer within the reach of working class Jamaicans, there is no maximum investment so clients are free to bid for as much as they want on the shares. Other features include liquidity- the preference shares will be listed on the Jamaica Stock Exchange, making them transferable if clients want to cash out. In fact they can be used as collateral for loans of up to 70 per cent of their value, and there is also no withholding tax at source.

Dale James, market risk manager at JMMB also stressed the offer's attractive interest rate, which he said was better than comparable Jamaican dollar and USD instruments offered by the Government of Jamaica with yields of between 6.5 and 7.5 per cent after tax.

"A J$ denominated asset is a better buy at this time. The dollar would have to depreciate by 10 to 11 per cent, which means reaching $95.46 before a US asset of comparable duration would be a better buy," James said. "Given the stability we have around IMF and the fiscal responsibility rules that are in place there is no expectation that the dollar would reach close to that."

Growth and diversification across the region

The J$2 billion in additional funds targeted through the offer is to be used to further JMMB's growth and diversification strategy across the region in banking, insurance, asset management, cambio, equities and pensions. Keith Duncan said JMMB also intends to re-enter the securities market in Trinidad and Tobago following improved growth prospects in that country. Plans are also underway to increase JMMB's presence in the Dominican Republic in the securities market, as well as to acquire securities dealerships locally and regionally and widen the retail network in Jamaica. He projects a minimum 15 per cent growth in profitability for JMMB within the next three years.

He added that despite the challenges in the regional business environment, JMMB has maintained its growth trajectory. Its pension fund unit has grown by 132 per cent or J$1 billion, while its loan portfolio, another area of focus for the company, has grown by 178 per cent, from $678 million to $1.89 billion for fixed asset loans. Additionally JMMB has seen growth in its net profit over the past six months by 25 per cent and its operating profit which increased 72.8 per cent. Efficiency ratio in its operations have also improved to 66.4 per cent from 74.9 per cent.

Interested investors can take up the offer at any JMMB location islandwide.


Source:
By Alicia Roache roachea@jamaicaobserver.com
Jamaica Observer
Friday December 17, 2010

http://www.jamaicaobserver.com/business/JMMB-s-new-preference-share-offer-provides-investment-opportunity-_8239360#ixzz18NuTEE1d