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Tetley Tea to go public

Published:Wednesday | March 31, 2010 | 12:00 AM
John Mahfood, general manager of Tetley Tea Company Jamaica Limited. - File
Tea Bags.

Tetley Tea Company Jamaica Limited (TTCJ), another small family company run by general manager John Mahfood, has announced plans to launch an initial public offering in the by end of the second quarter, and list on JSE Junior Stock Exchange by the end of June.

Tetley, like the other two junior market candidates that launched IPOs in the past five months, has selected Mayberry Investment Limited as lead broker for the float targeted at raising $100 million.

Details of the offer will be released closer to the IPO launch, but the planning is already "pretty advanced", Mahfood said Monday.

"We have the drafted prospectus, our accounts are up to date and we are now going through to make sure that the prospectus is fully compliant," said Mahfood.

The targeted capital will fund the expansion of the tea manufacturer's warehouse and marketing of its products on the export market, he said.

The Jamaica Stock Exchange, at the launch of the junior market last year, said then there were 10 prospective candidates preparing to list.

Access Financial Services was the first to launch, raising $100.195 million in the process at $18.34 per share.

The market was blown away by Blue Power Group's debut last Thursday, which closed exactly one minute after the offer opened, having immediately got subscription of $122 million, well above its target of $87.9 million at $3.89 per share.

Tetley Tea, the manufacturer of a range of Tetley and Caribbean Dream brands, sells approximately 40 per cent of its product to the English-speaking Caribbean and United States market.

Turnover at last count

The company's turnover at last count was $400 million, according to Mahfood, who did not offer the period in which the sales were made.

In addition to its own brands, TTCJ also manufactures under contract to companies such as Lasco, GraceKennedy, Kendel and some companies on the international market.

This segment of the company's business accounts for about 10 per cent of revenue.

Tetley Tea operates out of a 10,000 square foot complex on Norman Road in Kingston which houses its plant, warehouse and administrative offices.

It has another 6,000 square foot warehouse on Harbour Street, and is planning to add another 4,000 square feet of storage space, to be financed from the IPO.

"The increase in warehouse space will allow us to be more efficient with our exports, store more inventory, faster turnaround time to receive and send out inventory," said Mahfood.

"We hope to significantly expand our exports, and within the next three to four years we expect to have more sales on the export market than the local market."

While Mahfood said that the company is not immediately looking to diversify, he noted that the company would not turn its back on any new opportunities.

Tetley Tea was acquired in 1995 by John Mahfood and his father Adeeb from the Trinidad-based conglomerate Neal and Massy.

The company, which is presently 90 per cent owned by the Mahfoods, is reportedly the largest producer of tea in the English-speaking Caribbean with 100 million teabags sold annually.

With most of the company's manufacturing inputs are imported, but Mahfood said TTCJ is working with the Ministry of Agriculture and Fisheries to identify farmers who are interested in producing and supplying his factory with herbs.

"We are working to build up a local supply of herbs with farmers. Lemon grass, commonly known as fever grass, are the only herbs that we get locally," Mahfood said.

"We still have to import ginger, peppermint and others in significant quantities."