JMMB to issue new shares on the market, if its owners approve
Pending shareholder approval next month, JMMB Group plans to increase its capital by 20 per cent via an offer of shares to the public.
At the current trading price of the stock, the level of increase sought equates to around $17.5 billion, but JMMB is not commenting on the pricing of its pending offer nor the timeline ahead of the vote. It coincides with JMMB Group’s move to acquire one-fifth of insurance conglomerate Sagicor Financial Corporation, in which it is investing US$200 million, or the equivalent of $27 billion in Jamaican currency.
Shareholders will vote on a resolution to facilitate the share issue at the company’s annual general meeting scheduled for September 18. They will be asked to approve the issue of up to 325 million additional ordinary shares in the capital of the company, which would rank equally with the existing ordinary shares of the company. JMMB’s board approved the plan on August 2.
“The date for the issuance of additional shares, and corresponding pricing, is not available at this time, as this is subject to the approval (by shareholders) of the resolution to issue additional shares,” said JMMB Group Chief Financial Officer Patrick Ellis in response to queries.
Ellis said the offer would be open to both current shareholders as well as the public.
JMMB currently has 1.63 billion ordinary shares in issue on the market valued at $84.5 billion. While the offer price remains undisclosed, were the shares to be issued at the current trading price for the JMMBGL stock, it would raise its market capitalisation to just above $102 billion.
Earlier this month, JMMB advised that on August 2 its board of directors, via a round robin resolution, approved a proposal for the company to seek, at its next annual general meeting, the approval of its ordinary shareholders to issue up to 325 million additional ordinary shares in the capital of the company, ranking on equal footing upon issue, in all respects with the existing ordinary shares of the company.
Ellis said subject to the upcoming vote, JMMB directors would determine whether to float all or just some of the 325 million share units.
In recent years, JMMB Group’s fundraising on the stock exchange has been done via a series of preference shares. The company currently has about 10 preference stock listed on the Jamaica Stock Exchange, in JMD and USD currencies, with coupon rates ranging up to 7.5 per cent.
The financial conglomerate, whose holdings span investments, banking and insurance in three regional markets, said it chose to go another route with its financing strategy, at this time, to give the group more financial flexibility in the future, but was still wedded to prefs as a financing vehicle.
“The approval of this resolution does not prohibit JMMB Group from deciding to do a preference share in the future,” said JMMB. “The issuing of ordinary shares also provides existing shareholders and new investors an opportunity to participate directly in the profits of JMMB Group going forward, and also allows the directors to respond to the demand from investors, for additional JMMB group shares,” the company said.
JMMB declined to affirm or deny whether the additional offer was specifically geared at acquiring the stake in Sagicor Financial, which is headquartered in Barbados but operates in multiple markets, including Jamaica.
It is buying at least 20 per cent of Sagicor Financial through a US$200-million investment in Alignvest Acquisition ll Corporation of Canada. The transaction is pending Alignvest’s closing of the takeover offer for Sagicor Financial. Both the takeover and the JMMB subscription are expected to be completed by the end of September.
Alignvest Acquisition ll Corporation, which trades on the Toronto Stock Exchange as a blank-cheque company or special-purpose acquisition corporation, also has financing deals with two New York-based investors – KGT Investments, known as Highgate; and HG Vora Investments – which will broaden the extra-regional ownership of Sagicor.
JMMB Group previously stated that it plans to finance the stake in Alignvest with cash and debt. The Jamaican company held about $31 billion in equity as at March 2019, inclusive of share capital of $1.86 billion. Its total assets at the time amounted to $320 billion, including cash of $31 billion.