Mon | Jun 24, 2019

Hylton Dennis | IPO funding good for UWI

Published:Sunday | November 18, 2018 | 12:00 AM
Hylton Dennis
The Jamaica Stock Exchange building at Harbour Street, downtown Kingston.
Professor Hilary Beckles
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As a regional institution of CARICOM, The University of the West Indies (UWI) has led in fostering the spirit of regionalism and giving relevance to fostering Caribbean solidarity despite the disappointing political odds against it, which has stretched and strained the institution's resources.

The vice-chancellor, Professor Hilary Beckles, and his team, including pro vice-chancellor for planning, Professor Densil Williams, are thinking smart about turning to IPOs to generate sustainable funding for the expanding regional institution.

They need to engage with a Jamaica Stock Exchange that is flexible, dynamic and responsive to realise the national game-changing opportunities for Jamaica that can arise from moving in this direction, and similarly, with capital-market managers in other territories.

The JSE will find in the UWI the ideal pilot for launching an intellectual property (IP) index to add to the attractive segmentation of investment options for investors on its securities trading platform.

The UWI's announcement of its IPO consideration is timely and visionary, although my intelligence on it reveals a surprisingly long gestation in the context of which Professor Williams' tentative affirmation is disingenuous. This is because it is natural for this cerebral dynamism to be displayed by the leadership of an institution that can boast that it is ranked by the Wall Street Journal in the top five per cent of universities worldwide.

 

NORM VS EXCEPTION

 

If it was the norm, rather than the exception, for the UWI, Sir Hilary would not have recently had to defend the institution against as significant a critic as president of the Private Sector Organization of Jamaica (PSOJ) Howard Mitchell, who weighed in against its intellectual inertia and underperformance in the standard symbiotic relationship between university scholars, industry, and governments to grow national economies.

For too long, Jamaica was said to have been at a crossroad. The positive economic fundamentals it is now registering are indicating that it is moving again, having selected a good route on which to continue the journey to prosperity. I see the best prospect of sustainability lying in the national embrace of what I call socialist capitalism.

This involves divesting state enterprises, revenue infrastructure, and revenue management services through the stock exchange, enabling nationals an equitable stake in the prosperity of the country. It also involves a shift in focus of the private sector and JAMPRO to outbound foreign direct investments, ensuring that Jamaica is no longer relegated to earning crumbs from exporting raw material components to industrialised countries that enjoy all the cream.

Since through JAMPRO the foreign companies have gained ownership of Jamaica's primary resources and anchor industries and are repatriating the profits, the only way to survive is to adopt the FDI template.

At a certain level, like other countries where wealth is concentrated in a small demography of the population, Jamaica has all the liquidity needed to change the country's investment profile.

Jamaicans made a killing from government paper over the decades of reckless borrowing conduct when most of the savings deposits mobilised by financial institutions went in loans to the Government. This cash haul was liberally disbursed to currency speculation, depressing the value of the Jamaican dollar before retreating to the capital market as a prudent act of self-preservation, rather than altruism.

What the UWI presents in its intention to go IPO, which can be replicated across the spectrum of local universities, is the biggest money-mining clusters of enterprises on its platform of innovative scholarship, research, and captive consumer community. The UWI's greater value is its regional relationships.

 

EQUITY INVESTMENTS

 

I do not recommend consideration of floating any university as a composite stock investment option. Instead, related enterprise clusters should be organised and offered to the investing public. The UWI, Mona, has biotech industry such as colossal Jamaican scientist Professor Henry Lowe's research company, which is attracting billions of dollars of equity investments from multinationals.

The UWI has a spatial mapping GIS programming enterprise. It has partnered with housing developer 138 Student Living for a massive campus build-out. It has partnered with international call centre leader Sutherland Global. It has a lucrative footprint of concession operators in fast food, financial and retailing.

My idea of a university town extends way beyond the parochial limits of August Town and Papine, which have been the boundaries of the one contemplated by the university and urban planners for decades. It is a way more massive, grand, realisable concept, for the moment beyond their wildest imagination. This is the biggest gold mine that can be added to making The UWI a gem of an investment nexus.

It is the UWI's choice whether or not to take the lead in charting the course of the economic game-changer of socialist capitalism that I am proposing. The Government's choice, too! So let's see if anything except a talk shop will come of it.

- Hylton W. Dennis is a publisher and past vice-president of the Press Association of Jamaica. Email feedback to columns@gleanerjm.com and denscriptions@yahoo.com.