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Prime minister happy with Wigton's $14-billion IPO

BY BALFORD HENRY
Senior staff reporter
balfordh@jamaicaobserver.com

Thursday, May 23, 2019

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“[IT'S] a good day for the government and shareholders,” was how Prime Minister Andrew Holness described yesterday's listing of the Wigton Windfarm's IPO (Initial Public Offering) shares on the Jamaica Stock Exchange (JSE).

Holness told persons in attendance at the JSE's downtown Kingston office that the IPO had earned $14 billion, a record haul, which was more than twice the $5.5 billion predicted for the sale of the government-owned company's 11 billion shares which were placed in the market on May 1.

Holness, buoyed by the success of the first offer of Government's shares to public ownership under a new “wealth socialisation” programme, is expected to continue with at least four more entities, including its 20 per cent share in the Jamaica Public Service, and ownership of the secondary mortgage financier, the Jamaica Mortgage Bank (JMB), expected to be among the next.

“We are not concerned that the market doesn't have the capacity. What is demonstrated here, having $14 billion chasing $5 billion, tells you that there is capacity in the market, and with change from a high interest rate policy there is liquidity in the market and that liquidity is chasing secure assets, assets that will yield profit,” Holness said.

“... The Government has a duty, as well, to make sure that there is a steady flow of investment in ready assets,” he added.

The prime minister pointed out that the new trend towards publicising Government shares is a policy decision of his Administration.

“When we became the Government the existing thought was that Government needed to own assets. For obvious reasons, if there is a profitable asset, why would the Government want to divest itself of it? Government should always be seeking to divest itself of unprofitable assets. And the second reason is that, for strategic reasons you want to have an energy company, you want to own it, and that was the thought held by previous governments and indeed there were some in this Government that held that view. So there was a wrestling of ideas as to what should be the position on this,” he said.

He said that, for strategic reasons, governments want to own an energy company, and that was the thought held by the previous Administration as well as some members of his own Government.

However, he said that there is an overarching policy, that if the country is to achieve economic growth, it has to fully maximise all the assets that it has, and history has shown that the best way to maximise assets is to have private sector participation for the entrepreneurial spirit to be in charge of assets.

“But, in this age of good governance, major assets that are in the hands of Government are not always properly run, and the challenge is that the decisions that are made are not always the best economic decisions. So you have assets that could earn you the maximum potential, but the decisions that have to be made are usually weighed down by considerations that are political, and other considerations that are not necessarily the best use of the asset,” Holness stated.


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