Mailpac targets $495m from November IPO
Courier company Mailpac Group Limited, MGL, hopes to settle at least $263 million in debt to its parent company, Norbrook Equity Partners, through a $495 million initial public offering of shares on the junior stock market.
Mailpac, which used the borrowings from its parent to revamp its infrastructure, technology, and strategic positioning since 2017, is giving up 20 per cent of the business to stock market investors at $1 per share.
Norbrook Equity will own the other 80 per cent.
The subscription period for 500 million shares on offer under the IPO runs from November 22 to December 6. Shares in the invitation are split between newly issued shares in Mailpac and existing shares for sale by Norbrook Equity.
“Norbrook conducted two rounds of financing over the past three years, and the proceeds were invested in the portfolio companies of Norbrook, including $263 million into Mailpac Services. In addition to typical repayment terms, the most recent financing requires that all net proceeds from an IPO of any Norbrook subsidiary must be used to pay down the facility,” the company said in its prospectus.
The remainder of the funds will be used by Mailpac for general corporate purposes, including working capital, operating expenses and capital expenditure.
If successful, Mailpac will come to market with $2.5 billion in capitalisation at listing on the exchange. The company in September had total equity of $27 million.
The delivery company’s offer, which was released on Wednesday, comes in $5 million shy of the maximum capital raise of $500-million to list on the junior market of the Jamaica Stock Exchange.
NCB Capital Markets has been selected as lead broker for the IPO.
As a pull to potential investors, Mailpac is pitching e-commerce as a space poised for growth, and accordingly projects that its profit will grow threefold over the next five years.
The company recorded revenue of $851 million for the first three quarters of 2019 and net profit of $203 million.
“… While online shoppers in Jamaica have jumped from an assumed 0.2 per cent of the adult population in 2010 to approximately 6 per cent today, this is a far cry from the penetration rates seen globally. A recent study shows that 76 per cent of the US population shops online today. Accordingly, we believe that the business has only begun to scratch the surface of the opportunity it has in serving the country’s e-commerce needs,” MGL said in its prospectus.
Through partnership with its sister company, ePayment Group, Mailpac is also finalising the launch of its own prepaid Mailpac MasterCard that persons can top up at different locations, and utilise for shopping online, but only for items that are shipped through Mailpac.
“This solution is targeted for the significant base of unbanked and underbanked consumers that have identified products online that they want to purchase, but don’t have a transactional tool to do so. The Mailpac MasterCard will enable this segment of the market to shop online and will ensure their purchases are shipped through Mailpac,” the courier company said.
Mailpac is a decade-old company that has grown organically and through acquisitions. Its client base of online shoppers is estimated at 50,000.
Mailpac Group was newly formed to consolidate the operations of Mailpac Services and Mailpac Local. Its directors are: Khary Robinson, executive chairman; Mark Gonzales, executive director and CEO; Garth Pearce; William Craig; and Tracy-Ann Spence.
Mailpac Services, formerly known as Mailpac Express, facilitates online shopping and shipment to Jamaica using a mailing address hosted by the company, while the local arm offers cross-country delivery for Jamaican businesses.