TransJamaican IPO projected to triple Wigton subscriptions - Pricing, prospectus and offer-period disclosures still pending
The terms under which the Jamaican Government is taking over toll concessionaire TransJamaican Highway Limited, TJH, from its French owners are still to be disclosed, including the cost of the deal, but plans are well under way to float the company on the stock market.
The current managers have agreed to remain at the helm of the company for five years following its listing on the Jamaica Stock Exchange (JSE).
The limited information to date suggests that it could become one of the largest transactions historically on the market, at what the Financial Gleaner estimates to be about $11 billion, based on statements by the Government and lead arranger of the initial public offering (IPO) of shares, NCB Capital Markets Limited.
NCB Capital also expects the subscription to the TransJamaican IPO to triple the 30,000 that flocked to Wigton – which would make it the most sought-after IPO in history.
Finance Minister Nigel Clarke and NCB Capital co-hosted an event Thursday that was essentially meant to whet investor appetite for the offer, for which both the timing and pricing are yet to be finalised.
“It is possible to be a multiple or two of Wigton, let us see,” said Clarke at the briefing in New Kingston.
Renewable energy company Wigton Windfarm Limited, which the Government divested via the JSE earlier this year, listed with a market valuation of $5.5 billion, or 50 cents per share.
Asked by the Financial Gleaner about TransJamaican’s financial details at the briefing, Clarke interjected mid-sentence, saying “this is not the time” for such questions.
“We want the investing public — retail and institutions — to be ready,” he said during his presentation.
Clarke later told the Financial Gleaner that the company holds strong cash flows and would represent a unique opportunity for pension funds and individual investors.
Under Jamaica’s ownership, TransJamaican will bid for future road tenders in a competitive process as a means of new revenue generation.
The company was created by Bouygues Travaux Publics to operate the 35-year ‘BOOT’ concession it won in 2001 from Jamaica to build, own, operate and later transfer the country’s first toll road – the Highway 2000 East-West corridor – back to the Government.
Half of the concession period has since elapsed.
The East-West toll road network, which is operated through Jamaica Infrastructure Operator, comprises T1, a 43.5-kilometre stretch between Kingston and May Pen, Clarendon, with a connection through Spanish Town, St Catherine, and T2, a 6.4-kilometre stretch that runs between Kingston and Portmore.
The first toll plaza was opened at the Vineyards in St Catherine in 2003, followed by another in Spanish Town in 2004, one in Portmore in 2006, and one in Mineral Heights near May Pen in 2012.
Data provided by TransJamaican for 2017 indicate that for the most travelled tolling point – Portmore, St Catherine – the concession holder was pulling in revenues above $8 million on a daily basis, according to Financial Gleaner calculations that were based on toll traffic volumes and toll rates.
TransJamaican indicated that up to that period, revenue had been growing in the range of five to 10 per cent yearly.
In the wake of winning the contract, Bouygues in its 2002 annual report placed a €110-million value on the TJH concession, but a search of its subsequent financials yielded no update.
The ordinary shareholders in TransJamaican now include Bouygues Travaux, with 13.2 million of 27 million ordinary shares; Vinci Concessions of France, with 6.8 million shares; Washington-based International Finance Corporation, the private sector-funding arm of the World Bank, with 4.6 million shares; and Societe de Promotion et de Participation Pour la Coopération Economique SA of France, which holds 2.4 million shares.
Jamaica’s National Road Operating and Constructing Company Limited, NROCC, holds a single ‘golden’ preference share through which it is said to have veto power over decisions made by the toll concessionaire.
TransJamaican’s latest annual returns for 2018 described the Jamaican Government as having “more than 50 per cent” of the issued shares of the company through the single preference share, while Bouygues itself holds 48.8 per cent of the ordinary shares and equivalent voting rights.
Over the life of Jamaica’s toll-road programme, which includes other roads build by the Chinese, NROCC has racked up massive debts that government documents have placed at $99 billion to meet its project obligations.
Clarke said that the funds raised in the TransJamaican IPO will go towards paying down debt but gave no specifics. However, well-placed sources have said that the Government is likely to finance the takeover of TransJamaican Highway with a loan.
NCB Capital Markets CEO Steven Gooden says the TJH listing was expected to surpass the amount raised in the IPO for Wisynco, which holds the record for the largest stock market float in Jamaica’s history. That IPO raised $6 billion.
“It is conceivable that we will attract 90,000 applications” for TransJamaican, Gooden added. The broker has been able to handle such large numbers because of its investment in a platform that allows for electronic subscriptions.
NCB Capital was selected to arrange the TransJamaican transaction in a competitive tender that attracted bids from 16 brokers, according to auditor PricewaterhouseCoopers, which managed the process.