Nov 2007 Financial News

JMMB seeking $420m from dual preference share issue

Nov 28, 2007

Jamaica Money Market Brokers Limited (JMMB) has announced a dual redeemable preference share offer to raise a targeted $420 million of equity.

The offer, which opens December 5, will be made in two tranches: a 12.25 per cent preference stock priced at $2.95 per share open to subscription by JMMB's 100,000 clients; and the other, a 12 per cent stock priced at $3 per unit to be sold on the open market. Both preference stocks will be redeemable in three years.

Returns on the stock, which is targeted for listing on the Jamaica Stock Exchange, are quoted per annum but payable on a monthly basis, the company said.

Three-year fixed rate

The rate will be fixed for the three-year duration of the offer, with an effective tax rate of 16.33 per cent for JMMB clients and 16 per cent for the open market, respectively.

Minimum share purchase on each offer is 10,000 units, representing an investment of $29,500 to $30,000, with no upper limit on the subscription.

JMMB's offering follows May-berry's, which raised $500 million in November at $3 per share on a 12 per cent preference stock. The units were listed on the Jamaica Stock Exchange November 19.

JMMB's preference share issue, which closes on December 14, will bring the number of new listings since the start of the year to four, and increase the number of preference stock listed on the Jamaica Stock Exchange to 14.

JMMB says its issue is to raise financing for its efforts at market penetration through expanded products for the corporate and consumer markets and a new line of business in credit services, and to give the company more flexibility to fund its expansion, both locally and regionally.

Central america penetration

The brokerage, whose assets under management top $103 billion to make it the third largest brokerage with 100,000 clients by its own measure, has recently expanded into the Dominican Republic. It plans to deepen its penetration of Central America within three years.

"We expect the offer to be successful," said group CEO Keith Duncan.

"It's an attractive offer, appropriately priced with a reasonable return."

Duncan has not ruled out a possible upsizing of the offer.

Mayberry and NCB Capital Markets, the two last entrants on the market with preference issues, were well received with oversubscribed offers.

While not disclosing any details, Senior Originator in JMMB's Structured Finance Unit, Charles Chambers, said that a third tranche to the offer will be available to the market next February.

"The preference share offer represents only 7.0 per cent of JMMB's capital base, thus we are more than able to cover our obligations," said Chambers.

The company's capital base broadened to $7.2 billion this year.

JMMB clients will have the added benefit of using their preference shares as security for loans from JMMB, with access to up to 70 per cent of the amount invested, the company said.


Source:
The Jamaica Gleaner
Sabrina N. Gordon, Business Reporter (sabrina.gordon@gleanerjm.com)

Wednesday November 28, 2007
http://www.jamaica-gleaner.com/gleaner/20071128/business/business5.html