Business

Mayberry Jamaica Equities to launch IPO this month

BY BALFORD HENRY
Senior staff reporter
balfordh@jamaicaobserver.com

Sunday, June 24, 2018

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Mayberry Investments Limited (MIL) is to launch the IPO for its new subsidiary, Mayberry Jamaica Equities, by the end of June.

Chief Executive Officer (CEO) Gary Peart made the announcement at Wednesday's annual general meeting of MIL at the Knutsford Court Hotel in New Kingston.

Peart recalled that at a meeting in December, stockholders authorised the board to reorganise its wholly owned St Lucian subsidiary, Mayberry West Indies Ltd (MWIL). The subsidiary was renamed Mayberry Jamaican Equities Ltd.

This was necessary to to enhance shareholder value and, in that respect, to carry out such transaction or series of transactions as the board deemed fit.

Peart noted that, pursuing that decision, a dividend in specie was declared of 10 per cent of the net book value of MWIL. This dividend in effect transferred, pro rata among its stockholders, shares in MWIL held by the MIL and constituting 10 per cent of MWIL's issued share capital.

He noted that MIL paid cash dividends amounting to over $270 million, one of the highest cash dividends paid out in the history of the company. Subsequently, in February, MIL paid the stock dividend, which at the time was valued at $688 million and, notably, some three times greater than the cash dividends.

Peart also informed the meeting that, since February 28, the value of the dividend has increased significantly, because the value of the underlying business has appreciated since then.

“I believe that we have been successful and, since last year, you have actually seen where the Mayberry stock has broken out of a particular trading range, and we have seen where it has traded as high as $7.20. It is currently now in the range between $6 and $6.50, and is still trading below its net book value,” the CEO noted.

“Our expectation is that, when Mayberry Jamaican Equities starts to trade, we expect that it will trade at what we call the book value or net asset value,” he added.

Peart pointed out that MIL paid over $1.8 billion in cash dividends when the stock dividend's $688 million is added, so the dividend would be $2.5 billion and, as the value of the shares increased, the effective dividend would be more.

“So in essence, when we came to the shareholders in 2005, and sold shares to them and raised a billion, we have put that billion to good use, so much so that we were able to pay you back in excess of $2.5 billion, plus increase the value of the company almost five times,” he stated.

“So management hasn't done too badly, in my opinion,” he told the gathering.

At the same meeting, a second resolution was passed authorising the company to take the requisite steps to change the name of Mayberry West Indies Ltd to Mayberry Jamaican Equities Ltd.

The board of the company also passed a resolution authorising the company to take all necessary steps to cause MWIL (re-named Mayberry Jamaican Equities Ltd) to be listed on the Jamaica Stock Exchange, before the end of the first quarter of 2018.”

The Jamaica Stock Exchange (JSE) requires a minimum of 20 per cent of a listed company's shares to be issued to the public, so it appears likely that MIL will raise around $700-800 million from the general market prior to listing.

Peart also explained that all shareholders of Mayberry, as of February 28, have shares in the new entity, Mayberry Jamaican Equities

“We expect to launch this IPO by the end of June. Today is the 20th of June and I have been gladly informed by my team that I am on track and, hopefully, my word will be my bond. So in short order you get information,” he told the meeting.

He also referred to MIL's first-quarter results, which show that “the reality is that our little company, as at March 31, 2018, crossed $10 billion in shareholders' equity”.

“'We have kept our heads down as we continue to try to create value, and numbers don't lie… Ten billion dollars in shareholders' equity is no mean order for a business our size,” Peart noted.

Mayberry Jamaica Equities is primarily a portfolio of listed Jamaica equities on the local stock exchange, and whilst there is the ability for the company to borrow, the expectation is that it would not borrow more than 20 per cent of the value of the portfolio.

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