Thu | Dec 8, 2016

Sterling Investments to field 40 million shares in rights offer

Published:Friday | March 13, 2015 | 12:00 AM
File Charles Ross, CEO of Sterling Asset Management Limited.

Having secured the approval of shareholders for a stock split as well as a new issue of common shares in February, Sterling Investments Limited indicated this week that its pending rights offer will make 40 million shares available for subscription.

The aim is to raise in the region of $450 million, at $12.40 per share.

With the 10-to-one split of the stock, SIL's share price was also split from $134 to $13.40, or a dollar more than the pricing of the rights offer.

"It is quite customary when you have a rights issue to offer a discount, to make it more attractive to people who want to take up the offer; and because it's a large offer then the small discount really encourages people to participate," said Charles Ross, chief executive officer of Sterling Asset Management Limited, the company that manages SIL.

"It's not yet open, but we have had very positive responses from most of the institutions that we have spoken to. As you know, the pension institutions are some of the biggest investors in the company. We expect a good response from them," Ross said.

The offer of one additional share for every unit held is renounceable and shares not taken up will be offered to other willing investors. The offer covers 40,145,470 units.

The company said in a circular this week that it reserves the right to increase the offer of shares, as well.

Subscriptions open on March 18 and close on April 1. For applicants of excess shares, the closing date is April 8, the company said.

The majority of SIL's current shareholders are pension funds, retirees and individual local equity investors, numbering no more than 110, Ross said. SIL will pay dividend at least twice per year.

Prior to the split, SIL had 4,014,547 shares listed. Their stock market value is about $538 million.

The company is capitalised at $539.5 million, according to its 2014 yearend financial report. The company noted in its circular that since inception, its book value per share has grown 35 per cent after fees and distributions.

Total revenue rose 38.5 per cent to $96.7 million in 2014, from $69.8 million the year before. This was mainly due to a 89 per cent increase in interest income from $29.1 million to $55 million year-over-year. Profit for the year was $59 million, up from $46 million in 2013.

SIL is an associate company of Sterling Asset Management Limited. The company was created in 2011 and went public via a listing by introduction in October 2014.

The rights offer is being brokered by NCB Capital Markets.

The fees associated with the offer amount to $15.3 million.

avia.collinder@gleanerjm.com