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Jamaica Stock Exchange, Inter-American Development Bank project to boost junior market recruiting

Published:Friday | January 16, 2015 | 12:00 AM
File Marlene Street Forrest, General Manager of the Jamaica Stock Exchange.

The Jamaica Stock Exchange (JSE) will announce a partnership with the Inter-American Development Bank (IDB) next week aimed at recruiting new listings for the junior stock market.

IDB will provide technical support to the Jamaican exchange and prospective junior market companies through the Multilateral Investment Fund (MIF).

On Wednesday, JSE General Manager Marlene Street-Forrest said that the project, captioned 'Promoting Access to Equity Financing to SMEs through Jamaica Stock Exchange Junior Market', would focus both on improvements to the junior market structure and assistance to SMEs that fall short of listing requirements.

"The intended result of the project is that of increasing access to equity financing for Jamaican SMEs ...," Street-Forrest said.

Late in 2014, the JSE again raised its concerns about the phased rollback of incentives for listing on the junior market, saying they were critical to its growth and ought to be revitalised.

With 23 companies, plus two preference stocks listed since 2009, market activity has resulted in $3.4 billion of capital raised for expansion.

The junior market capacity-building project will cost US$1.14 million (J$130m), co-financed by the MIF, whose portion amounts to US$563,750 and the JSE with US$574,800.

"The reason for this agreement and contribution from the MIF is the importance that the IDB is placing on equity financing for the growth and development of the economy and in which SMEs are considered to be a major driver," Street-Forrest said.

The project, the JSE head said, will focus on 'awareness-raising' and consultations; enhancement of JSE functions; training for prospective listing companies, mentors and brokers; and knowledge management and communication. And, it will stress access to equity financing via the junior market as a funding source for business expansion and job creation.

The phase-out of the 10-year holiday from income tax for junior listings kicked in at the end of December 2013. New ordinary listings now get a five-year waiver up to yearend 2016. In 2014, the JSE junior exchange added two listings of ordinary stock, Knutsford Express in January and Sweet River Abbattoir in September; and one preference stock, Eppley STP, in December.

Under amendments to the Income Tax Act, the special tax benefits will be fully phased out by December 2021.

A JSE report released in November noted that all but two junior market companies reported increases in revenue in 2013 in comparison to 2012.

Seventeen of the companies recorded profit in 2013, of which 14 saw an uptick in their accumulated surplus, compared with 2012.