Marcella Scarlett, Business Reporter
Sagicor Jamaica has created a holding company called Sagicor Real Estate X Fund Limited, which it plans to float on the stock market and then use th equity raised to invest in one of its own unit trusts and other assets.
The initial public offer (IPO) for shares in Sagicor X, set for September 24 to October 18, aims to raise a minimum of J$995 million.
The proceeds will finance the acquisition of Sigma Real Estate units, as well as the development of a water park at Jewel Runaway Bay Beach & Golf Resort, Sagicor Jamaica said last night.
Sagicor plans to float 200 million of Sagicor X Fund shares, but says it may extend the offer to 500 million shares, depending on demand. The shares are priced at J$5 but unit holders in Sagicor Sigma Real Estate Fund will be offered a special price of J$4.95 per share.
Sagicor X was incorporated in May 2011 in St Lucia initially under the name Sagicor X Fund SPC Limited. The company remained dormant until 2013 when its name was changed to Sagicor Real Estate X Fund Limited.
Its directors include Richard Byles, Ravi Rambaran, R. 'Danny' Williams, Dr Patricia Downes-Grant, Rohan Miller, Michael Fraser and Stephen McNamara - all associated with either Sagicor Jamaica or its parent, Sagicor Financial Corporation.
At incorporation of Sagicor X Fund, a single share priced at US$1,000 was issued to Sagicor Life Jamaica Limited. The amount is to be reimbursed to Sagicor Jamaica from the IPO proceeds.
This special share carries 51 per cent of the votes at a general meeting but no right to dividends or receipt of any distribution assets on winding up. Ordinary shares have one vote each.
Sagicor X was created to list the underlying assets of the Sigma Real Estate portfolio on the JSE. The prospectus indicates that there are a dozen properties, in the portfolio, inclusive of three hotels, office space, and industrial/warehousing space.
The overall portfolio is valued at about J$12 billion. Resorts make up 59 per cent of the holdings, office space, 23 per cent, and industrial space, 15 per cent, according to the prospectus.
The 12 properties are:
R. Danny Williams Building - New Kingston
Sagicor Industrial Park - Freeport, Montego Bay
Sagicor Industrial Park - Norman Road, Kingston
Sagicor Montego Bay Commercial Centre - Montego Bay
63-67 Knutsford Boulevard - New Kingston
Sagicor Industrial Park - Marcus Garvey Drive, Kingston
78A Hagley Park Road - Kingston
23-25 Seymour Avenue - Kingston
Spanish Town Shopping Centre - St Catherine
Jewel Dunn's River - St Ann
Jewel Runaway Bay - St Ann
Jewel Paradise Cove - St Ann
The property at 23-25 Seymour Avenue is an undeveloped land lot suited for residences. The company said it has no immediate plans to develop it.
Sagicor X Fund's income will come largely from its investment in Sagicor Sigma Real Estate.
The company will act as a passive investment vehicle, but will pay up to 85 per cent of income earned in dividends to its stockholders.
Sagicor X's funds will be invested in "other properties and marketable securities", according to the prospectus.
"As with any unit trust, the price of its units depends on the value of the assets that it owns and as the value of its holdings increase so will the price of its units. The price of shares issued by X Fund is expected to be significantly influenced by the unit price of the Sigma Real Estate Portfolio," the document said.
Sigma Real Estate unit trust fund is marketed as a moderate risk property portfolio, with investment in real estate properties currently located in Jamaica, but the company also plans to acquire assets in the wider Caribbean region.
The unit trust fund is projecting revenue of J$4.6 billion and profit of J$591 million at yearend December 2013. It projects that revenue will double in five years and profits will triple.
Sagicor Sigma X Fund projects profit of J$213.7 million in 2013, which it expects to rise to J$538.5 million by 2017. Revenue projected for this year is J$253 million, which it expects to double to J$562 million by 2017.
Sagicor Jamaica and Sagicor Pooled Investment Fund have indicated that they jointly intend to exercise their options to buy shares at the IPO price with a view of holding up to 80 per cent of the issued shares of X Fund.
This, the company says, will give it control over the election of directors and other key corporate decisions and will make it unlikely that any investor other than Sagicor Jamaica or entities affiliated with the group would bid for control of X Fund.
"Such bid if made usually is expected to be at a premium above the prevailing trading price of the share. Accordingly the likelihood of stockholders receiving a takeover bid is receiving a takeover bid is reduced perhaps significantly," the prospectus states.
The document also says X Fund intends to pay dividends to it its shareholders at least twice per year.
Lead arranger of the offer is Sagicor Investments Jamaica Limited.