Sun | Jan 21, 2018

JMMB to acquire 20% of Key Insurance as company goes public

Published:Thursday | March 24, 2016 | 12:00 AMSteven Jackson

JMMB Securities aims to take a 20 per cent stake in Key Insurance Company Limited when the company launches its initial public offering via the junior stock market next week.

Key Insurance aims to raise up to $209 million and rush to list on the JSE Junior Exchange to catch the tax incentive window, which closes at month end.

JMMB Securities will act as the lead broker to the offer which opens March 29 and closes on March 30, with the option to close even earlier.

JMMB would seek to acquire 73.6 million shares of the 368 million total issued shares following the IPO. The general public would have the option to acquire 18.4 million shares or five per cent.

The three sisters, who fully own the company, will reduce their holding to 75 per cent under the IPO. The siblings include Sandra Masterton, who leads the company as managing director following the 2011 passing of founding shareholder and chairman Sonny Gobin; Natalia Gobin-Gunter, who holds the position of executive chairman and deputy managing director; and Kala Abrahams, executive director.

The company, which provides protection against most risks to individual and commercial property, will use the proceeds of the offer to increase its capital and expand the core business.

The total consideration, assuming successful invitation totals $209.1 million from the 92.1 million shares of the 368 million total shares. At the minimum, Key aims to raise $119 million.

"If the invitation is successful in raising at least $119 million, the company will close the invitation on the closing date March 30 or earlier, and make an expedited application to list the ordinary shares on the junior market by Thursday, 31 March 2016," said the directors in the prospectus.

"If the application is successful, the directors anticipate that the company will be able to take advantage of a special concessionary tax regime."

The tax window allows five years of income tax relief.

Key Insurance operates from six locations across the island. The company has 91 staff of which nine are in senior management. In 2013, the company underwent significant restructuring to facilitate growth via efficiency measures. This resulted in the consolidation of the New Kingston head office and the Cross Roads branch.

In 2015, Key made $23 million net profit on gross premiums of $961 million, compared to $25 million net profit a year earlier. In 2013, it recorded a $15.6 million net loss on gross premiums of $678 million and a profit of $14.6 million in 2012. Its total equity stands at $880.6 million.