Fontana closes successful IPO in 5 minutes

Observer business reporter

Friday, December 14, 2018

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Fontana Limited yesterday closed its initial public offering (IPO) for 249,874,965 ordinary shares five minutes after opening to the market.

Lead broker on the initiative, Scotia Investments Limited, told the Jamaica Observer that the offer was oversubscribed. However, up to press time, the newspaper was unable to get information on the total number of applications.

The successful IPO means that the 50-year-old pharmacy has raised a little over $468 million, the majority of which will be used to take advantage of opportunities for improvement and expansion of the business.

Fontana's oversubscription does not come as a surprise to many investors, as the stock was said to be “very attractively priced” at $1.88, a price/earnings ratio that is well below that of the Junior Market. Expectations are that the share price will double shortly after listing.

Of the $468,077,925 raised, $234,040,086 will go to Fontana, while $234,037,839 will go to the selling shareholder, Burbank Holdings, which is controlled by Chairman Emeritus Shinque (Bobby) Chang.

Viewed as the leading pharmacy chain in Jamaica with five outlets across the island, Fontana is set to open its sixth location, covering 35,000 square feet, at the intersection of West King's House and Waterloo roads in St Andrew next year. The new location will be the largest of all Fontana pharmacies.

The company is now looking to expand to Portmore, St Catherine and Montego Bay, St James in addition to bolstering its online shopping platform.

Operated by the second generation of the Chang family and their spouses, Fontana's core business is the sale of pharmaceutical products through licensed pharmacies. It has diversified its product offering to include a vast range of beauty and cosmetic items, housewares, home décor, toys, baby items, electronics, school and souvenir products.

The company has a complement of over 300 staff members.

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