More than $10 billion expected from TransJamaica Highway IPO

Highway could benefit from $100 billion worth of infrastructure projects

BY DURRANT PAGE
Observer Business Writer

Friday, October 04, 2019

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The Government expects to rake in as much as $10 billion from the TransJamaica Highway initial public offering (IPO), which is expected to come on the market early next year, making it the largest in Jamaica's history, larger than both Wigton and Wisynco.

TransJamaica Highway holds a 35-year concession for the Highway 2000 East-West toll corridor comprising a 43.5-kilometre stretch between Kingston and May Pen, Clarendon, with a connection through Spanish Town, St Catherine, and a 6.4-kilometre stretch that runs between Kingston and Portmore.

While not committing to an exact amount that is being sought from the IPO, Finance Minister Dr Nigel Clarke was guarded in his response to questions about price and the proceeds of the IPO. He told yesterday's press conference announcing the upcoming IPO that it would be much larger than the recent $5.5 billion Wigton Wind Farm IPO, running as much as two or even three times that amount.

He would give no details about price or the exact amount of money being sought. However, the finance minister would only declare that the IPO would be the biggest in Jamaica's history pointing out that yesterday's function was “merely to bring awareness and encourage the investing public to take advantage of this opportunity”.

The minister sought to explain the transition of TransJamaica Highway, which is owned by an overseas consortium comprising the French construction company Bouygues Travaux, with 13.2 million of 27 million ordinary shares, and Vinci Concessions of France, with 6.8 million shares.

The partners in the consortium are the Washington-based International Finance Corporation, the private sector-funding arm of the World Bank, with 4.6 million shares; Societe de Promotion et de Participation pour la Cooperation Economique SA of France, which holds 2.4 million shares, and the National Road Operating and Constructing Company Limited (NROCC), which is the only preference shareholder.

Dr Clarke explained that “the Government through NROCC will be acquiring TransJamaica Highway and thereafter offering the company to the public through the IPO.” National Commercial Bank has been selected as the lead broker and arranger while PricewaterhouseCoopers is the government's financial advisor on the IPO.

CEO of NCB Capital Markets, Steven Gooden, who spoke at the press conference, pointed out that “the TransJamaica Highway IPO would be the biggest it has dealt with, far bigger than Wisynco, which is the biggest IPO to date”. Wisynco offered 20 per cent of the company in an IPO two years ago that brought in $6.1 billion in total as financing for expansion of its manufacturing capacity and acquisitions.

Gooden applauded the Government for its foresight and deliberate move in deepening the equities market and bringing more financial inclusion in the capital space. The NCB Capital Markets CEO remarked that “2019 will go down in history as a landmark year for the domestic capital market”.

He added that NCB will be engaging brokers regarding the IPO, pointing out that the prospectus will be coming out shortly, but he would also not give a definitive time for that or an indication of the price per share.

Gooden said NCB Capital Markets will be offering its electronic platform where members of the public can go online and place their order in real time and at their convenience.

He added that more details about the IPO will be forthcoming over the next few weeks.

Managing director of deal atPricewaterhouseCoopers,Wilfred Baghaloo pointed out that 16 companies responded to the Request for Proposal for the lead broker on the IPO of which NCB Capital Markets came out on top following a rigorous evaluation process.

$100-BILLION INFRASTRUCTURE

Minister Clarke hinted that the privatised TransJamaica Highway could benefit from $100 billion worth of infrastructure projects that will be coming on stream in the next five years, noting that the company can seek partnership and vie for some of these contracts.

He listed a number of bypass infrastructure as among those $100 billion infrastructure projects that will be rolled out over the next five years.

Among the announced bypass projects are Montego Bay in St James, Lucea in Hanover, Oracabessa in St Mary and Runaway Bay in St Ann.

He posited that the company can also bid for other infrastructure projects in the region.


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