Pulse looking to acquisitions for growth - Villa Ronai, cosmetics company, radio station among potential targets
Pulse shareholders on Tuesday approved the creation of an additional 5.55 billion shares in the modelling and hospitality company.
That will take its authorised capital to 7.5 billion shares and sets the stage for Pulse Investments Limited to raise funds from the market, if its director see fit.
The board is to decide whether it wants to raise equity through a renounceable rights issue, conduct a stock split, or do a combination of both. The split by itself is not a fundraising measure – it’s usually a tool to make the stock more attractive for trading – but the rights issue is.
The company will need fresh capital if it follows through on either of its plans to acquire new companies and buy out leased property.
“One of the things that we are considering, and this is by no means final, we have had over the years opinions from shareholders and others that Pulse would be better served if it owned the property it now leases,” said Pulse Chairman and majority owner Kingsley Cooper.
“The feeling is that it will get more traction from institutional investors and others if that were the case, so acquiring the Villa Ronai property is one of the things that we are considering,” he told shareholders.
Villa Ronai is personally owned by Cooper, and Pulse holds a 50-year lease on the property.
The board is also looking to expand Pulse’s creative business segment through acquisitions, with an eye on a cosmetics company, and radio station IrieJam which broadcasts from New York and primarily targets Caribbean nationals in the United States.
Over the years, Pulse Investments has evolved from its core activity of promoting talent in the fashion and entertainment industry and today marries its fashion know-how with a focus on television, event production and a real estate business.
Its real estate portfolio consists of shops, offices, restaurants, accommodations, event venues and hotel facilities. The properties, are owned by Cooper and leased to Pulse Investments.
Villa Ronai spans some nine-acres the in Stony Hill, St Andrew. The property, which already offers accommodation for guests, is slated for the addition of 68 suites as well as the construction of residential units in a new development called Pulse Homes.
“We are thinking of Villa Ronai at this time because of the current investment that is being made and also the plans for future investment in terms of Pulse Homes, and so on,” Cooper said.
Pulse Homes development was first announced in January shortly after the issuing of a $250 global note by the company. Some $65 million of the raised funds was used to settle existing bank debt Pulse had, while the remaining $185 million is expected to be split between Villa Ronai and the Pulse Homes project.
The first phase of the Villa Ronai development is expected to be commissioned into service in summer 2020. Pulse Homes is still at a preliminary stage, but Cooper says the entrance to the property will likely be at Diamond Road in Stony Hill.
“We will be looking to come through Diamond Road into the valley. There is a road that already takes us into the valley and to get us over to the property that we own and if we need to acquire,” he said.
“Half of the land that is down there is land that will never be developed, based on where it falls. Whether it is Diamond Road or Old Stony Hill Road, most of the homes are built to the road and the higher part of the land, so that is something that we are seriously looking at,” the Chairman said.
The company wants to do a 3:1 split. But as for the rights issue Cooper has not disclosed the targeted fund raise.
“The stock split is proposed because once the stock price gets to a certain level, we find that there seems to be a barrier to subsequent trades or further growth in the value of the stock. So splitting the stock has proven beneficial in the past. It increases liquidity and it makes it easier for investors to come into the company,” Cooper said.
At year ending June 2019, Pulse scored net profit of $653 million from $1.06 billion of combined revenue and other income. At half-year ending December, the company made $473 billion in profit from combined revenue and income of $603 million.
The Pulse stock, meanwhile, is up 72 per cent year to date. It closed Tuesday at $10.32 per share, valuing the company's 1.63 billion of issued shares at $16.8 billion.