Mayberry to lend more to clients from big bond
The large bond offer from Mayberry Investments will allow the investment bank to dramatically increase its loan activity.
Mayberry plans to raise $5 billion in a bond offer that opens today, December 2, with the option to upsize to $7 billion.
Mayberry said at a briefing that investors buying into the bond would be providing liquidity for its loan business, which is currently valued about $7.9 billion.
“We have a good-sized loan book, and we have a lot of demand on the loan book. We actively give loans against our securities whether that be stocks or bonds or any other securities we trade in,” said Mayberry Chairman Christopher Berry.
Financial institutions reportedly raised over $400 billion in 2021 from the bond market. Almost all those funds were raised from people of high-net-worth and institutional investors. Regulators usually restrict the general public from participating in such offers due to the risk. The blockade is meant to protect unsophisticated or small retail investors.
In the general course of its operations as an investment bank, Mayberry gives margin loans or rapid same-day loans to clients who pledge their bonds or equities as collateral to buy more securities or assets.
“When a client needs funds to do quick deals and sees a nice real estate opportunity to buy or a business going for a good price. They can scoop it up,” said Berry. “It allows us to reach out to more people and grow credit.”
The company chose to do an initial public offering for its bond rather than its usual private bond offering to wealthy clients, which opens it up to subscription by retail investors.
Mayberry CEO Gary Peart said the company had new technology to handle the offer via the chosen channel while saving on administrative costs.
“Technological advances is one of the beautiful things about this bond,” said Peart, explaining that investors can apply, receive interest and principal payments via electronic means.
“Because of that it is now significantly less costly to service all the customers out there,” he added.
Mayberry offers general brokerage services, but is known for its boutique services to key clients.
The prospectus states that the proceeds of the offer are for the expansion of its portfolio of securities loans and for general corporate purposes.
Mayberry Vice President of Investment Banking Dan Theoc said the upsized bond proceeds “would give us the potential to double our loan book”.
“We have huge demand for loans right now, for credits that we have assessed and for our clients that we know and feel comfortable [with],” said Theoc. “So, we are funding our business so we can deploy that capital.”
The Mayberry bond will be listed on the Jamaica Stock Exchange. Currently, only a few bonds are listed on the JSE Bond Market. None are liquid.
By opening up its bond to the wider market, Mayberry is hoping to increase liquidity or trading activity on the JSE bond platform.