Barita's $9-billion APO opens on August 26

Barita's $9-billion APO opens on August 26

Small investors offered discounted price

BY DURRANT PATE
Observer business writer

Friday, August 14, 2020

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Barita Investments Limited goes to the local equities market on August 26 with an additional public offering (APO) to raise upwards of $9 billion.

The investment company, which is experiencing accelerated client growth, is offering 173.73 million new ordinary shares with the ability to upsize by inviting offers for an additional 86.86 million new ordinary shares. A total of 121.15 million shares has been reserved for Barita's parent company, Corner Stone Financial Holdings Limited; 12.98 million shares for existing shareholders and key investors at a price of $52; 12.98 million shares also at $52 per share; 9.4 million shares, reserved for hotel workers, farmers and civil servant costing $49.75 and small investor being allocated 4.59 million shares at a discounted price of $49.

Assuming that the APO, which closes on September 16, 2020, is fully subscribed, Barita will rake in $9 billion of which approximately $153 million is expected to be used to pay transaction costs. The net proceeds from the invitation are expected to be $8.84 billion. Barita will act on its own behalf in the implementation of its APO.

USE OF PROCEEDS

Barita, which has the distinction of being one of the oldest stock-broking companies in Jamaica, is seeking to raise the capital to increase its operating capacity in alignment with current business performance and trajectory. This comes as the company decided that the timing is right to expand its shareholder base and give a wider group of equity investors the opportunity to participate in the continued profitable growth.

The use of proceeds is to enhance Barita's operating capacity and capabilities to accommodate the current growth trend into the future. The proceeds of the APO will be used to increase the company's investment banking and underwriting capacity, upgrade technology platform to leading global standards, seed new managed and expand product offering to suit a wider range of investor profiles.

In addition, the APO proceeds will be used to fund footprint expansion both local and regional, working capital needs to develop talent as well as broad and operating capacity to accommodate the exiting growth trajectory.

BARITA FINANCIALS

Barita, founded by Rita Humphries-Lewin in 1977, is the home of one of Jamaica's top-performing equity funds and handles over $181.0 billion of funds as reported in the Audited Financial Statements as at September 30, 2019. The investment firm remains on a promising trajectory of growth.

The profit out-turn for the six months ended March 31, 2020 represents Barita's highest net profit performance for this period in its history. During the period, Barita reported net profits of $1.0 billion, which represented a 95.9 per cent increase over net profits of $516.7 million for the corresponding period ended March 31, 2019.

Net profit for six months translated to earnings per share of $1.24, relative to a restated $0.68 per share for the comparable six-month period in 2019. On a 12-month trailing basis, net profits of $2.2 billion were generated, resulting in a return on average equity of 19.9 per cent.

Non-interest income grew by 90.1 per cent or $817.6 million to $1.7 billion relative to $907.3 million reported for the first six months of 2019. The growth in non-interest income was fairly evenly distributed across all our major revenue drivers in this segment.

 

COVID-19 RESILIANCE

In his forward to the APO prospectus Chairman Mark Myers pointed out that Barita as a business continues to successfully navigate the challenges of the pandemic through its disciplined approach to risk and liquidity management, a robust business continuity plan as well as the strength of its balance sheet. He acknowledged the $10.3 billion in fresh equity capital raised in 2019 from Barita's two successful rights issues and one issuance of preference shares.

He said the company's prudence has translated into Barita continuing to reflect best in class capital and liquidity ratios as seen in its financial results for the six months ended March 31, 2020. Capital to total assets stood at 28.2 per cent relative to the regulatory minimum of 6.0 per cent, indicative of Barita's significant capacity to withstand the shocks of the COVID-19 pandemic.


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