Sep 2006 Financial News

NCB Capital Markets lists preference shares

Sep 26, 2006

National Commercial Bank (NCB) Capital Markets Limited - the stockbrokerage and funds management arm of NCB -listed its 11.75 per cent preference shares on the Jamaica Stock Exchange (JSE) on Friday.

The listing comes almost two months after NCB Capital Markets concluded a successful public offering, which was oversubscribed by 16 per cent - between July 25 and 28, the firm offered preference stock units to the public valuing $300 million and received subscriptions totalling $348.5 million. The terms of the offer included cumulative dividends of 11.75%pa, with a potential bonus of 0.15%pa, depending on NCB Capital Markets meeting a Return on Equity of 20% pa or greater, going forward.

The listing allows preference shareholders the additional benefit of earning tax-free dividends and the opportunity to freely trade the stocks. Christopher Williams, managing director of NCB Capital Markets Limited, lauded this latest initiative, saying that it had significant implications for both the company and its investors.
"The listing of the NCB Capital Markets' preference stock units on the Jamaica Stock Exchange increases our capital base allowing us to be a bit more aggressive in our proprietary investment strategy," notes Williams. "It also presents the investors with an alternative investment with a predictable yield and the option to trade the stock as they wish along with the potential for capital appreciation".

With common stocks currently struggling, NCB Capital Market's preference share offer was praised as a good move by many financial analysts. The move was regarded as innovative as it was believed that the structure of preference stocks would likely attract investors - it has limited risks due to its redeemable feature and also has a fixed dividend.

Preference stocks are not the usual type of investment instrument used in the Jamaican market. In fact, prior to NCB Capital Market, the last company to list preference shares on the JSE was Pan Jamaica in 2001.


Source:
Julian Richardson
The Jamaica Observer
Sunday 24th September, 2006

http://www.jamaicaobserver.com/magazines/Business/html/20060923T170000-0500_113232_OBS_NCB_CAPITAL_MARKETS_LISTS_PREFERENCE_SHARES_.asp