Stage set for 15 new JSE listings a year?
THE Jamaica Stock Exchange (JSE) is pushing for 15 new company listings annually over the next few years, which could see a minimum of $1.6 billion in new capital being raised each year.
Now that the Exchange will open it doors to new member dealers (see related story) and the finance minister has announced extended tax benefits for Junior Market listings for another five years, Marlene Street Forrest believes that the stage is set for just that.
The first half of 2012 only saw one listing on the Junior Market, even though the JSE general manager projected that there would have been 12 this year.
"We are expecting that even before the year ends to have seven to eight (listings) on the Junior Market, and we are expecting to have two on the main market," she said. "You would have expected to have seen some before now, but many of the company were in wait-and-see mode — they were listening to that Budget."
The finance minister was considering modifying the 10-year tax benefit (five years free of corporate income tax followed by five years of half tax) for listing on the Junior Market in this year's Budget.
Peter Phillips extended the incentive for a further five years, but announced that the finance ministry will be eliminating all these special tax holidays which are presently available.
Street Forrest told the Jamaica Observer that the announcement was meant to give companies a sense of urgency in coming to market earlier.
"So you have a window," she said.
But neither of the two main lead brokers to have listed companies since the
start of the Junior Market in 2009 see the need to
be more aggressive in pursuing listings.
"It will make our job harder, but we been investing in jamaica for 26 years and this will continue regardless," said Chris Berry, chairman of Mayberry Investments, which oversaw 10 of the 13 listings over the last four years.
Stocks and Securities CEO Mark Croskery said that companies going public on the Junior Market
are more focused on reducing leverage, or debt, improving working capital position and expanding.
"These drive the process in our opinion," he said, even though he admits the five-year tax-break is still very beneficial. "It is better than Zero."
Street Forrest said that she wouldn't be surprised if the benefit is extended again "if at the end of five years, and before that, the minister sees some of the objectives set out are being met".
"The benefit foregone will be more than made in the second five years," she said. "It is a constant improvement in the government coffers. It is a net positive to employment and net positive for sustaining growth."
That aside, the minimum amount a company can raise on the Junior Market is $50 million, while the main market doesn't have a minimum, companies would list there if they want to raise more than $500 million.
Should the JSE get its targeted 13 Junior Market listings and two on the main market annually, it would translate to a minimum of $1.65 billion of new capital being invested in stocks each year.