ISP Finance lists on JSE junior market
ISP Finance Services Limited (ISP) on Wednesday became the second micro-lending institution to list on the junior market of the Jamaica Stock Exchange (JSE) in about seven years and the 28th overall to do so. The company is the fifth listing for 2016.
This follows an oversubscribed initial public offering (IPO) brokered by VM Wealth Management. ISP got the nod from the JSE to list on its junior market on Wednesday.
ISP successfully raised $116.11 million from the offer, surpassing the $97.97-million target. The offer was oversubscribed and closed after one minute.
There were 116 applications for the 48.92 million shares of the company, including 45.9 million which were reserved for directors and employees. The shares were priced at $2 each.
Speaking at the listing ceremony, Devon Barrett, general manager of VM Wealth Management, said the good structure at ISP made the listing easy and augurs well for the future.
"ISP Finance demonstrated all the characteristics of a properly organised company, which made our work, goals and the IPO process a whole lot easier. We expect their good performance to continue into the foreseeable future and that the new and existing shareholders will see significant benefits," Barrett said.
The volume of funds raised will rank ISP as number 14 of the 28 equities listed on the JSE Junior Market.
Chief executive officer of ISP Finance Services, Dennis Smith, says the proceeds of the IPO will be used to pay down debt in a bid to bolster their balance sheet and build capacity to take on debt in the future. He says ISP wants to do all it can to be a part of the growth trend in the microfinance market.
"Our board recognises that the market for short-term personal and microloans holds tremendous growth opportunities. This capital injection will thereby put the company in a position to raise further capital that it intends to use to expand its loan portfolio and ... increase the company's market share of the overall market for small and microloans," Smith said.
Benefits of listing
Meanwhile, Barrett is touting the benefits of microlending institutions such as ISP listing on the junior market and its impact on the economy. He says the microlending sector is poised for further growth and that the stock market is a good place for capital formation.
"With more than 200 players in the industry, serving a market worth more than $20 billion, the potential is great for several more listings, which would benefit the stock market and the economy as a whole. One of the most efficient places to find financing is the stock market. So, while the number of players has done much to facilitate competition, by virtue of more financiers raising capital on the stock market, the opportunity to lower interest rates is that much greater," Barrett said.
With the oversubscription, some applicants will receive a refund. VM Wealth says the formula for satisfying applications was for a 100 per cent allocation to smaller lots.
"Those applications for 20,000 shares or less will be allocated 100 per cent of the amount requested. Applications with over that threshold will be allocated between 10.77 and 14.32 per cent of the amount requested," Barrett said.
Barrett said VM Wealth had invested in the magnitude of a "normal small investor" and that this would not result in them staking any further claims on ISP.
ISP Finance was incorporated in 2007 with a staff of three, initially providing unsecured personal loans to persons in the security industry, before expanding to other employee groups. The security market continues to account for 45 per cent of all loans.
Through a suite of six loan products, ISP, which operates out of offices in St Andrew, finances personal expenses such as utility bills, school fees, home repairs and auto insurance, and family emergencies, including funeral expenses and medical costs. ISP also provides a variety of funding options for small entrepreneurs in the manufacturing, services and distribution sectors, including traders, hairdressers, bakers and caterers. The company's employees has since grown to 40.