Businesses demanded more creative financing options in 2017


Sunday, January 28, 2018

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It would appear that lower interest rates on savings, the constriction of the repurchase agreement market, and the expansionary outlook for the local business converged last year to significantly expand the financing options available.

At the Jamaica Stock Exchange (JSE) 13th Annual Regional Conference at Jamaica Pegasus this week, Steven Gooden, head of NCB Capital Markets shared that, “Historically, many, including market players, have questioned the breadth and depth of the local capital markets —that is, its capacity to absorb large, complex transactions. Then came 2017, which saw a swell in the size, number and complexity of transactions done in Jamaica.”

Gooden explained that during that period, private equity transactions booked significant gains.

i) We saw $105 billion worth of private placements issued under the Financial Services Commission's exempt distribution regime, up approximately 24 per cent relative to prior year.

ii) Of that amount, three of those represented the largest Jamaican-dollar registrations ever in Jamaica…ranging from $10 billion to $18 billion each.

iii) One institution, through a series of debt issues, raised close to $46 billion locally to prepare for what will go down as one of the largest, if not largest, regional acquisitions for this decade.

“Not to be outdone, in the public space investors also were also able to participate in earning returns through the stock market,” Gooden shared. These included:

i) 16 securities listings, among which was an $18-billion corporate bond listing via introduction… a record in recent years;

ii) The two largest initial public offers (IPO) ever in the history of Jamaica, one being Productive Business Solutions... Then there was the recently closed Wisynco IPO which raised $6.1 billion … attracting close to $18.8 billion, bringing in 8,000-plus new shareholders to its company and 2,000-plus new equity investors to the market;

iii) The JSE being on track to have its 100th listing on the exchange this year, having closed 2017 with 96.

Gooden explained “with the opportunities we see, if we agree that a well-functioning capital market can result in lower interest rates, especially in certain funding segments, what 2017 has shown us ladies and gentlemen, is that the local capital markets stand ready to be an engine of growth through the provision of flexible financing solutions”.




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