Tue | Nov 21, 2017

Wisynco to go public with $1b IPO, plans to expand

Published:Friday | November 3, 2017 | 12:00 AMSteven Jackson
Chairman of Wisynco Group William Mahfood.
Wisynco's Sam Mahfood Distribution Centre.
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​Wisynco Group, a top beverage maker, will tap the stock market for funds to expand its reach across Jamaica and pay down on debt, through an initial public offering (IPO) of shares targeted to raise more than a $1 billion.

The listing will allow more Jamaicans to partake in the ownership of one of Jamaica's largest businesses held by the Mahfood family.

The support the company received from Jamaicans following last year's fire aided in the decision by the owners to go public.

"We got an outpouring of support from employees, customers, and Jamaicans. We got a real warm response to the company. Based on the life cycle of the company, and the efforts of rebuilding the warehouse, we felt it important for employees and the broader Jamaica to participate in the ownership of the company," said Chairman William Mahfood.

Wisynco sales hit $21 billion in 2017, representing a compound annual growth rate of 11 per cent since 2013. Its profit margin has averaged 36 per cent since 2012, with a return on equity above 30 per cent, the Financial Gleaner understands.

While avoiding specifics, Mahfood expects the company to list at or below the main market multiples. The market is currently trading at 12.5 times earnings.

Wisynco plans to list the operating divisions of the group, which includes distribution and manufacturing, but not the restaurant arm, which holds franchises for Domino's Pizza and Wendys.

Mahfood said listing the manufacturing and distribution operations as a whole would provide greater value, even while noting that splitting both arms would have posed a challenge.

"It is very difficult to do that and it was not practical," he said, adding that neither the manufacturing nor distribution arm was small enough in size to list on the junior market.

"We are going to raise more than $1 billion in sale of shares. Some of the funds raised will go towards a major expansion in St Catherine and expansion of the business in Western Jamaica. Some of the funds will look at more efficiency and some used to pay down on debt," Mahfood said.

The group, which is headquartered in St Catherine, operates than 350,000 square feet of warehouse space, 110,000 square feet of factory space, and more than 700 sales-related full-time employees.

NCB Capital Markets is the lead arranger for the IPO and broker for the transaction, with PricewaterhouseCoopers acting as financial adviser.

At the end of process, Wisynco will remain majority owned by the Mahfood family as it has been for the last 50 years.

"The draft prospectus has been submitted to the Companies Office and Financial Services Commission for review and comment. Once the prospectus is finalised, we will have it registered for listing as soon as possible. Based on the typical timeline, and assuming that the review process goes smoothly, one could reasonably expect a listing by end of year," said NCB Capital Markets CEO Steven Gooden.

Gooden said he could not discuss the valuation of the company until the release of the prospectus.

"The valuation will reflect the growth expectation for the company and what the market is willing to accept," he said. "Given Wisynco's size, it's likely to be one of the largest such IPOs on the JSE."

Founded in 1965 by the Mahfood family, West Indies Synthetic Company began manufacturing 'Iron Man' water boots from a 6,000 square foot factory in Twickenham Park, St Catherine. The company soon evolved to offer a full-range of footwear for men and children, the production of cups and containers, and the distribution of imported beverages from Trinidad.

Today, Wisynco Group owns and manufactures its own portfolio of beverages - WATA water, WATA flavoured waters, BOOM Energy Drink and BIGGA Soft Drink. It is also the exclusive bottler for the Coca-Cola Company.

On the distribution side, the company markets the products of its fruit juice joint venture partner, Trade Winds, as well as a range of items on behalf of local and overseas producers.

steven.jackson@gleanerjm.com