CWJ Credit Union hunts $900m ... Aims to list deferred shares on the JSE
Community & Workers of Jamaica Co-operative Credit Union Limited (CWJCCU) launched a deferred share offer on Friday that seeks to raise $900 million from investors and other cooperatives.
The issue is the first of its type seeking to be listed on the stock exchange, said MoneyMasters Limited, broker for the offer, which is open for subscription from May 18 to June 15.
"We are certainly excited and hope that the JSE will be able to list these securities," said Marlene Street Forrest, managing director of the Jamaica Stock Exchange (JSE) on Friday.
CWJCCU chief executive officer Carlton Barclay said proceeds of the offer would be used to pay back maturing deferred shares; upgrade banking software to allow for Internet banking; offer new services, including partnering with Alliance Investment on card services; and working capital financing.
"So there is a lot we will be doing, but it costs money to do these things," said Barclay.
The CWJCCU deferred shares offer investors a return of 7.35 per cent fixed for 24 months on five-year and 10-year instruments.
The five-year instrument becomes variable after year two paying a reset rate of two per cent plus the six-month Treasury bill yield. The 10-year instrument offers a reset of 2.5 per cent, plus the six-month treasury rate after the end of the second year up to maturity. The rate on both instruments is reset annually.
Street Forrest said a successful offer would bring "a new set of investors" to the stock market.
"This will lead to a greater maturing of the capital markets," she said. "I am truly optimistic as to how this could indeed be a tool to further create wealth and financial inclusion and satisfy a prime objective of capital raising for credit unions and liquidity for shareholders. Let's see," the JSE boss said via email.
MoneyMasters said non-members of the CWJCCU wishing to participate in the offer may apply for membership in the credit union in order to qualify.
CWJCCU holds $11.5 billion in total assets of which institutional capital totals $1.6 billion. Last year, the credit union recorded a surplus of $381 million, up 397 per cent from $76.7 million in 2016.
"This is the highest level of surplus to be achieved in the history of the credit union. The surplus was impacted by a major one-off event, that being a refund of $119 million in LIME Pension surplus," according to CWJCCU's annual report.