Proven cross-lists to woo pension funds
By cross-listing its stock on the Jamaica Stock Exchange, Proven will be more accessible to institutional investors whose foreign currency holdings are restricted by law, says a top executive of the firm.
Proven Investment Limited’s 551.6 million issued shares can now be traded on the JSE’s Jamaican currency index as well as the US Dollar Market. The listing last Thursday was precedent-setting as the first stock in JSE’s history to cross-list on another platform operated by the 47-year-old exchange.
“The decision to cross-list was driven by the demand and discussions we had with those investors who wanted to be participate in Proven as shareholders, but were unable to purchase shares due to their regulatory restrictions,” said Johann Heaven, senior vice president of investments at Proven group.
The company’s primary consideration was access for pension funds, Heaven said. That market had $30 billion invested in the equities at last available industry data to last summer, representing nine per cent of pension assets under management.
“The JMD listing has allowed pension funds, unit trusts and other entities with restrictions on the level of their holding of USD denominated securities to purchase Proven’s shares,” said Heaven. “The listing should improve the liquidity in the Company’s shares as the shares can now be traded on either the main JMD or USD boards of the exchange, seamlessly.”
Prior to 2014, pension funds were allowed to hold 20 per cent of their portfolio in foreign currency assets by sector regular Financial Services Commission (FSC). But under reforms to the financial system, the FSC cap was substantially reduced to five per cent to align with that of the Bank of Jamaica, the primary authority for the foreign exchange market.
FSC data indicates that up to September 2014, the aggregate of foreign securities held by pension funds was 6.02 per cent of portfolio assets.
The BOJ has began raising the foreign assets cap on financial firms and will totally eliminate it next year, but the five per cent limit remains in place for pension funds. Fund managers are in discussion with the central bank about lifting it.
Proven’s cross listing followed a third rights issue by the company in May in which it had hoped for high levels of pension fund participation. The offer raised $3.5 billion and priced the stock at the USD equivalent of $18.50. The cross-listing under the symbol ProvenJA was effected at that price.
The stock has not traded since its listing, which was brokered by subsidiary company Proven Wealth Limited, with participation from NCB Capital Markets Limited, Sagicor Investments Jamaica Limited and Scotia Investments Jamaica Limited.
The Proven USD stock last traded at US$0.21 per share, which translates to $24.39 per unit. Proven Investment’s market value at the close of trading on Monday was the equivalent of $13.45 billion on the USD market, but only $10 billion on the Jamaican dollar index.
Proven was the pioneer stock on the JSE USD Market, listing at US$0.112 per share in July 2011. A second stock, Margaritaville Turks Limited, joined it last year.
Heaven said the Proven shares “have performed very well on the USD-denominated exchange” and that the company is “quite pleased with the level of trading of the shares, especially over the past year.”