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JSE courts overseas-based companies

Published:Monday | May 14, 2012 | 12:00 AM

As part of its strategic growth initiative, the Jamaica Stock Exchange (JSE) is seeking to court overseas-based companies, including those owned and operated by Jamaicans in the United States and Britain, to list on the local equities market.

The organization has already identified two prospective firms and is currently engaged in discussions with them, according to general manager Marlene Street-Forrest.

"Our major targets are companies that are owned and operated by members of the Jamaican diaspora, she said.

They can establish subsidiaries here and list on the exchange, which affords them a presence in our market, the ability to raise capital on the equities market, and the possibility to have a greater return on their investment compared to other markets in which they operate," said Street-Forrest.

But she also noted that "our research has shown that there is interest by many companies, especially those that are already doing business in Jamaica and the wider Caribbean.

In emailed responses to questions posed by Sunday Business, the JSE general manager said companies want to know more about our legal and regulatory environment and the investment climate. This is a market with potential, but it will have to be nurtured."

Businesses being targeted are located in the United Kingdom and the United States, but Street-Forrest has not disclosed in which country the two companies to which she referred were currently operating.

She said companies in Africa would also be targeted, but indicated that that would be done in the long term.

Among the benefits being used to attract businesses are attractive returns on investment, the ability to raise capital in the local market, and establishing a presence in a market where companies wish to have greater penetration.

In addition, Street-Forrest pointed out that the JSE listing fees are attractive and affordable. Charges for listing comprise an initial fee and a supplementary fee.

The initial fee is based on the value of total issued share capital of each new listing of securities and range from a minimum of just over J$70,000 to a high of J$1.4 million.

The supplemental fee range from just over J$14,000 to about J$70,000.

The JSE, the primary vehicle for raising equity capital in Jamaica, currently trades the ordinary securities of 49 companies, 37 of which are listed on the main market and 12 on the junior market.

The main market also has 17 companies which have listed preference shares, but trading activities are concentrated mainly around ordinary shares.

Total market capitalisation of the main and junior markets, as at December 2011, was J$643.04 billion.

Local companies make up the bulk of businesses currently listed on the exchange, but the JSE also lists the Trinidad-based firms Guardian Holdings Limited and Trinidad Cement Limited which operate regionally.

Street-Forrest said growth through market activities and new listings were high priorities for the JSE.

And she was not daunted by the delisting of one company, Sagicor Financial some three years ago.

"There is always a possibility that any company that list on either the primary market or other market may not see active trading. Trading activity depends on a number of factors, including the attractiveness of that company to investors whether with respect to price, current or future performance, dividend policy, among others," Street-Forrest explained.

Other business initiatives and deliverables going forward include the development of fixed income trading capability, a futures and options market, as well as listing of the JSE's ordinary shares.