LASCO Group has set a share price of $2.50 for each of its three subsidiaries, which will offer an initial public offering (IPO) of a 20 per cent share in each of the companies come September 15.

Lasco aims to raise $416 million through its IPO and subsequent listing on the Jamaica Stock Exchange (JSE) Junior Market.

The share price for each company is equivalent to a price to (pre-tax profit) earnings of five times.

Gary Peart, CEO of lead broker Mayberry Investments Limited, said the offer was “attractively” priced and will give good value for money.

“We believe that we have priced the offer very attractively and believe that investors will find that it’s a great value proposition,” said Peart, addressing journalists during a press tour of the Lasco Group headquarters on Red Hills Road in St Andrew on Monday.

Lasco announced in July that it was planning to go public, with approximately 40 per cent of the shares on offer reserved for employees, directors, members of the Caribbean Community of Retired Professionals, police, teachers, and nurses. It is listing three separate affiliated companies — Lasco Manufacturing, Lasco Financial Services and Lasco Distributors — in an effort to raise in excess of $400 million. The prospectuses of all three companies were posted on the Jamaica Stock Exchange website yesterday.

The prospectus states that the firm is seeking to raise approximately $195.8 million for Lasco Manufacturing, which will be inviting applications for up to 81,585,985 of its shares; and of those shares, 48,951,591 will be initially allocated to the general public at the Invitation Price of $2.50 per share.

Lasco Financial Services, in an effort to raise $58.8 million, will be inviting applications for up to 24,515,000 shares, of which 14,709,000 will be initially allocated to the public at $2.50 a share.

The firm aims to raise $161 million for Lasco Distributors and will be inviting applications for up to 67,118,600 shares, of which 40,271,160 will be initially allocated to the general public at the invitation price.

The funds generated from the IPO is to be used to build new manufacturing facilities, increase its product offerings and support its expansion thrust into other geographical markets.

Lasco Manufacturing, the firm’s export arm which produces milk and soy-based products, will be investing in the retooling and acquisition of new machinery, increasing its product portfolio and increasing capacity at its 25-acre White Marl, St Catherine property, where its operations will be consolidated to improve efficiency.

“We are running at a very tight capacity now and don’t have much capacity to withstand our portfolio, so we are now trying to add machinery and (production) lines to the manufacturing plant,” said Dr

Aileen Chin, managing director of Lasco Manufacturing.

She added that the consolidation excercise will cut operational expenses significantly.

“We are now manufacturing here on Red Hills Road and the distribution warehouses are in White Marl, so we had to be transporting raw materials constantly from White Marl to Red Hills Road and finished goods from Red Hills Road to White Marl… it’s a whole day transportation (excercise) that has been costing us a lot of money and affecting our profitability, so we are planning to move our manufacturing facility to White Marl so we’ll have everything organised,” she said.

Lasco Manufacturing products are distributed by some of the world’s most renowned retailers, such as Tesco, Walmart and Publix. It saw its net profit increase by 20 per cent to $109.8 million over the year ending March 31, 2010.

The firm is also seeking to expand its Lasco Financial Services business across the Caribbean and the UK. Lasco is a highly regarded agent of international money transfer company MoneyGram and was this year awarded its “Top Remittance Agent” in Jamaica. A focal point of Lasco Financial Services’ expansion intitiative will be the setting up of MoneyGrams into the wider Caribbean and the UK.

“As far as the Caribbean is concerned, we have already registered our company there and started to recruit agents in Barbados to do MoneyGram transactions. We’ve also made contacts in the UK already,” noted Jacinth Hall-Tracy, managing director Lasco Financial Services.

Proceeds of the IPO will also be used to expand and improve Lasco Financial Services’ Red Hills Road head office and expand the company’s payroll loan product. Lasco Financial Services saw revenues increase by 64 per cent to $55.7 million at the end of the financial year ended March, compared to the corresponding period last year. Total income multiplied to $10.3 million compared to $731,451 the year prior.

According to its prospectus, Lasco Distributors will use the net proceeds for general expansion purposes, including the expansion of its warehouse space and working capital for growth and business development comprising investment in the expansion of its product range and market development towards its goal of expanding market share.

Lasco Distributors comprises of a consumer division which oversees the distribution of more than 250 types of food, personal care and laundry products; and a pharmaceutical division.

Lasco Distrubutors had turnover of $5.8 million at the end of the financial year ended March, 16 per cent more than the corresponding period last year. Net profit for the year increased by 24 per cent to $97.7 million at the end of the period under review.

According to Lasco Distributors managing director, Anthony Chang, the segment is “poised for the future”.

“We have key commercial instincts within the unit, we continue to improve excecution programmes to get things done right and our planning processes have become much more vigorous,” said Chang, noting that “when you combine those three components, we have a good value proposition in our distribution arm”.

Meanwhile, Peart emphasized that the IPO is “first come, first serve” and urged potential investors to act fast.

“As soon as you see the prospectus, go to your financial advisor and take advice,” said Peart, adding “If you think it’s something for you to invest in, we implore you to carry your funds early and fill out your applications early.”

The Mayberry CEO also stated that he believes persons will be very pleased with the financial out-turn of the firm.

“Whilst in the past, the marketing etc spoke to the value of the products that they put out there, you will actually see as potential investors soon to become investors that there’s also value in owning piece of the company.”