Dennis Smith, CEO of ISP Finance Services Ltd, which listed as the 28th company on the Junior Market of the Jamaica Stock Exchange (JSE) on March 30, says the company is considering expanding to six towns in the island.

Speaking at the JSE listing ceremony, he said the start of trading for the company signalled the introduction to the Jamaican marketplace of a strong brand – ISP – asserting as well that the market for short-term personal and micro loans holds “tremendous” growth opportunities.

Smith indicated the company was in expansion mode. “Going forward, we intend to build on our core competencies and leverage our key strengths to greatly increase our loan portfolio by expanding our reach to Montego Bay, Ocho Rios, Mandeville, Spanish Town, Portmore, and May Pen,” he stated.

He said ISP would focus on increasing market penetration of services to public sector employees, employees of the service industry, and to small and medium-sized enterprises.

The proceeds from the IPO, the CEO added, “will enable us to strengthen our balance sheet and build our capacity to take on debt in the future”.

While ISP targeted $97.9765 million in its IPO, over 116 applicants applied for shares worth $116.118 million, surpassing the target. A total of 116 new shareholders were added following transaction close.

The company indicated use of funds as replacement of more expensive debt and a source of cheaper loan funding. The company’s loan portfolio was $304 million at the end of 2015.

Devon Barrett, general manager at Victoria Mutual Wealth Management, which was lead broker for the ISP’s IPO, noted at the listing ceremony that ISP is only the second micro-lender to list on the market. The other is Access Financial.

“Coming some seven years after the last listing … others should consider the listing as a means of accessing affordable funding,” he said.

Barrett stated, “I have noticed the trend in the sector, where, though still self-regulated, the institutions in the sector have progressed to observing industry-lending best practices and standards. When the legislation to formally regulate the industry comes on stream, its players, generally, should be ready to comply. In fact, if several other players follow in ISP’s footsteps, the discipline instilled by the JSE’s requirements of listed companies should put them in good stead, such that there should not be much displacement.”

The microfinance market, he noted, included more than 200 players in the industry, serving a market worth over $20 billion.

“The potential is great for several more listings which would benefit the stock market, and the economy as a whole,” he stated, adding, “one of the most efficient places to find financing is the stock market…as we are well aware, our cost of borrowed funds, while much lower than in the past, is still too high.

“ If these micro-lenders are financing their lending through borrowed funds, the need to earn a spread in order to remain viable pushes up the lending costs to the small businesses that access these loans. A fair percentage of the loans, approximately 50 per cent, go to small businesses. By raising capital on the stock market, ISP should be able to pass on the benefits to its clients, thereby stimulating more loans and more economic growth opportunities,” the investment manager said.