Sagicor Select announces $4-billion IPO for new Manufacturing and Distribution Fund

Friday, November 08, 2019

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Sagicor Select Funds Limited is returning to the equities market with another initial public offer (IPO) for the purchase of up to four billion shares in a new Listed Equity Fund (LEF) titled, Manufacturing and Distribution Select Fund.

The company intends to raise some $4 billion if the IPO is fully taken up with each share costing $1 with a discounted amount of $0.98 per share for Sagicor employees participating in the IPO.

There is an initial offer of $2.5 billion shares with the right to uptick this amount by a further 1.5 billion shares.

The IPO opens on November 20 and closes on December 4.

Kevin Donaldson, CEO, Sagicor Investments said that the aim of his company is to grow and preserve wealth through investing for Jamaicans.

“Our aim at Sagicor Investments is to take Jamaicans to the next level in investing, in order to create, grow and preserve their wealth. Sagicor Manufacturing and Distribution Select Fund will be another path to wealth creation through ownership of 30 of the island's largest and most profitable listed companies within the manufacturing and distribution sector,” he said.

With the company seeking to raise $4 billion from this new IPO, he noted that the Jamaican economy is at a unique point in its history, where the availability of appropriate investment vehicles, like the new Sagicor Select Fund, will serve to support economic growth.

“A vibrant capital market means firms and individuals have appropriate avenues to grow their businesses, as well as earn an attractive return. We encourage investors to get exposure to the manufacturing and distribution sector as it is an opportunity to own what you consume and use. This fund is just another step in enhancing Jamaica's vibrant capital markets,” he further stated.

This will be the second time that one of Sagicor Select's LEF, comprising shares and stocks listed on the Jamaica Stock Exchange (JSE) will be offered to the Jamaican investing public. The first was the Financial Select Fund, which was listed on the JSE in August this year.

The Manufacturing and Distribution Select Fund will primarily invest in securities in manufacturing and distribution listed on the JSE. It will track the Manufacturing and Distribution Index, which is an index established by the Jamaica Stock Exchange.

Investors will be able to track the value of the index as well as the net asset value and market value of the Manufacturing and Distribution Select Fund on a daily basis. These statistics will be published on the JSE's website and the Sagicor Investments Jamaica website on a daily basis.

According to the JSE, as at October 1, 2019, the Manufacturing and Distribution Index is comprised of 30 companies including Wisynco, which commands 18.30 per cent of the portfolio; Caribbean Cement Company with 14.45 per cent of the portfolio and Jamaica Broilers, which has a weighting of 8.92 per cent of the portifolio.

The listing includes Carreras with 8.62 per cent; Seprod, 8.26 per cent; Jamaica Producers, 6.31 per cent; Lasco Manufacturing, 4.78 per cent; Lasco Distributors, 2.37 per cent; Fontana, 2.05 per cent and Derrimon with 1.55 per cent.

According to the prospectus, which was published on Wednesday, “the company also intends to pay the expenses associated with the invitation out of the fund-raising proceeds. The company estimates that the expenses in the invitation will not exceed approximately $50 million inclusive of General Consumption Tax, and shall include the following services: arranger, financial advisory and brokerage fees; legal fees; auditor's and accounting fees; statutory fees including initial listing fees; marketing expenses and registrar and transfer agent fees”.

It is the intention of the company to apply to the board of the JSE for admission of the shares to be traded on the main market. The application for admission to the main market is dependent on Sagicor Select's ability to raise a minimum of $500 million in the IPO and meeting the criteria for admission set out in the main market rules.

If the application is successful, it is anticipated that shares will be admitted to trading within three to four weeks of the closing date.

Sagicor Select chairman, Colin Steele, says that through this IPO, ”the company seeks to democratise listed securities, more particularly those that relate to the manufacturing and distribution sector, for the benefit of the Jamaican public.“.

He pointed to several advantages of this LED such as the diversification and liquidity whereby an investor is able to derive the benefits of indirectly investing in a diverse portfolio of securities within a particular sector, which in this case is manufacturing and distribution. He explains that investors are able to buy one security and immediately derive the benefits of investing in all securities listed on the JSE that comprise the Jamaican manufacturing and distribution sector.

The Sagicor Select chairman also pointed to cost effectiveness, where investors trade an LEF on the JSE, they will only incur the trade fees associated with trading one security, as opposed to the trade fees that would be chargeable on trading all of the securities that comprise the Manufacturing and Distribution Index.

To facilitate a seamless application process, it was stated that a Sagicor Investment IPO hub will be open on November 12 at 6 Dumfries Road in New Kingston, where all corporate area applications can be submitted. Applications outside of the Corporate Area can be submitted at any Sagicor Investments locations islandwide.

Donaldson encouraged the public to open stock brokerage accounts early, to not miss “a great opportunity to earn your share of wealth through the Sagicor Manufacturing and Distribution Select Fund”.


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