FOLLOWING the negative impact of COVID-19, there seems to be a recovery in the local equity markets as several firms have stated their intention to raise billions of dollars in fresh equity capital.

Before the advent of the pandemic, the Jamaica Stock Exchange (JSE) had achieved growth of 36 per cent over 2019 and saw $34.03 billion in capital raised in the form of initial public offerings (IPO’s), additional public offerings (APO) and rights issues.

At the end of March 2020, there were three listings on the JSE, with First Rock, Caribbean Assurance Brokers and TransJamaica cumulatively raising $16.02 billion from their IPO’s.

Proven Investments Limited had also announced their APO in which they had signalled an intention to raise US$75 million ($10.4 billion) for several acquisitions and pipeline opportunities. However, COVID-19 in early March led to the overall JSE Index declining by 27 per cent and companies such as Alliance Financial Services and Tropical Battery Limited deferring their intention to list, after making earlier announcements about their listing process. Proven eventually closed their APO without an uptake after initial restrictions on foreign exchange, plus the subsequent market decline, made their APO difficult to execute.

Four months later, Barita Investments Limited heralded the charge of taking advantage of a crisis to raise capital.

Unlike their dual rights issue and non-redeemable preference share issue, which raised $10.2 billion, Barita has decided to issue an APO which, based on the current prices revealed in a disclosure, could lead to the company raising between $9.6 billion and $15.9 billion. If successful, Barita would surpass JMMB Group Limited’s APO which raised $12.3 billion between Jamaica and Trinidad and Tobago.

Sterling Investments Limited (SIL) has also indicated their intention to raise capital, with their annual general meeting notice having a resolution for approval of one billion units of new ordinary shares. The final resolution gives authority for the directors to do as needed for the implementation of new ordinary shares.

When contacted about the capital raise being an APO or rights issue, assistant vice-president (AVP) of trading and investments at Sterling Asset Management, Marian Ross said the details haven’t been finalised as yet. This potential capital raise comes just a year after SIL had their rights issue, which saw the investment holding company raise $202.4 million at $3.08 per share.

Other firms such as Panjam Investments Limited, Pulse Investments Limited, and Sygnus Credit Investments Limited (SCI) have all indicated to the JSE that they will be aiming to raise new capital through their own APO’s as well.

Although Panjam and Pulse haven’t provided any details on their possible APOs, Sygnus Capital Limited’s CEO Berisford Grey indicated that SCI was looking to raise at least US$20 million as part of its general thrust to expand their investments in portfolio companies.

When asked about the recent market developments, AVP of investor relations at GK Capital Management, Ryan Strachan said the push to raise equity from a desirous market was a wise move at this time.

“I believe that the duality of valuation discounts and the opportunity to leverage goodwill have caused the entities in question to pursue equity raises at this time,” Strachan said.

“I hope that this results in robust mergers and acquisition activity in the coming months. Much mention is justifiably made of the drop in the All Jamaica Composite Index (AJCI), but one would do well to remember that investors are not fleeing to a global ‘safe haven’ as none exist at this time, and larger shareholders are not parting with their holdings.”