Manufacture and distribution company Wisynco is seeking to raise an additional $1.16 billion in equity from the issuing of up to 149,414,576 new ordinary shares to prospective investors.

The offer which opens on the Jamaica Stock Exchange on Wednesday, December 6 at 9:00 am and will close on Friday December 15, 2017. The stock is priced at $7.87 per share.

Wisynco in its prospectus said the subscription consists of an additional 635,085,424 ordinary shares that are being sold by current shareholders to new potential investors valuing J$4.93 billion.

The Wisynco Group which has demonstrated sustained growth over the last five financial years in both its top and bottom lines, said it intends to use the net proceeds from newly issued shares to fund the expansion of its manufacturing capacity; investment in more efficient modern internal power generation and utilisation and acquisition locally, regionally and internationally.

New distribution partnerships are also being targeted by the company as well as plans to expand its distribution fleet and infrastructure to support the build out of its ‘Route to Market’ system. Wisynco also wants to establish a western distribution centre and plans on increasing working capital for distribution arrangements through additional/new third-party brands.

At least one financial company, JN Fund Managers, has suggested that investors buy into the offering of Wisynco. The company in a power point presentation said that while the IPO is priced at $7.87, the estimated fair value of the company is $10.86. Total implied return is valued at 39.92 per cent, from price upside of 38.04 per cent and dividend yield at 1.88 per cent.

“We believe that based on our use of the price-to-book and price-to-earnings relative valuation methods, Wisynco is being listed at a discount. Our estimated fair value is $10.86 based on the group’s projected performance in FY 2018.

“Additionally, based on the group’s stated dividend policy of a 20 per cent payout ratio, the estimated dividends for FY 2018 is $0.15. This translates to a potential dividend yield of 1.88 per cent on the issue price. Consequently, the estimated one-year total return is 39.92 per cent. We therefore rate Wisynco as a buy,” JN Fund Managers said.

Wisynco owns, manufactures and distributes a portfolio of popular beverage brands led by WATA and its extension of cranberry flavoured-WATA, BOOM energy drink and BIGGA soft drink. The company also owns and manufacture the SWEET brand range of plastic and foam disposable lunch boxes, plates and cups.

In addition to its own brands, Wisynco is the exclusive bottler for the Coca-Cola Company in Jamaica and has been bottling Coca-Cola products for some 11 years. Additional third-party beverage brands manufactured by the company include SqueezZ and Hawaiian Punch. Its beverage portfolio is completed by Red Bull, Tru Juice Freshhh, Welch’s, Mott’s, and Snapple.

JN Fund Managers said that with the addition of over J$1B in capital from the impending initial public offering as well as the company’s dominance in its industry, it uniquely positions the group to grow market share in the immediate term both organically and through acquisitions.

The investment firm also reckons that the company has significant scope to expand internationally as, currently, 1.4 per cent of revenue is generated from exports.

— Karena Bennett