VALUATIONS are currently underway for the Government’s stake in the Jamaica Public Service Company (JPSCo) and for the Jamaica Mortgage Bank ahead of the divestment of the former and privatisation of the latter.

The indication came from the Development Bank of Jamaica (DBJ), which is the entity charged with oversight of the Government’s divestment programme.

On Monday, the DBJ informed the Jamaica Observer that the professionals procured for the divestment of the GOJ’s shares in the JPSCo are a valuation consultant which is PricewaterhouseCoopers Tax & advisory services; the legal consultant which is Myers, Fletcher & Gordon; while the transaction advisor & stockbroker is National Commercial Bank Capital Markets Limited.

For the Jamaica Mortgage Bank (JMB), consultants procured to assist in executing the project include valuation consultant Ernst & Young Services Limited; legal consultant DunnCox; and transaction advisor & stockbroker Sagicor Investments Jamaica Limited.

For both entities slated for divestment, due diligence assessments are in progress and the recommended transaction structure is to be sent to Cabinet for approval prior to moving to the transaction stage.

The update comes two weeks after Finance Minister Nigel Clarke told a Mayberry Investments Investor Forum that the divestments were in train for this year.

“We have made advances with Jamaica Mortgage Bank and with the JPS…and I am definitely expecting in the next fiscal year, we will be able to launch at least those two,” Clarke told the forum.

JMB provides mortgage financing to the construction sector and indemnity insurance to mortgage providers. The JPSCo is the island’s sole energy distributor , a company in which the State has an almost 20 per cent share holding.

Clarke also told the forum, “There are others in the pipeline, I don’t want to speak about them just yet, but we have two others in the pipeline and we are going to continue to roll those out as we redefine the Jamaican State.”

As for the two entities now being lined up for divestment, the DBJ stated that it “is unable to provide details on a timeline for completion of the transactions at this time.”

However, the DBJ noted, “The GOJ holds 19.99 per cent of the cumulative total of ordinary shares and ordinary stock in JPSCo and plans to divest these shares.”

The share are held by the accountant general and the Development Bank of Jamaica (which holds as agent for the National Investment Bank of Jamaica Limited).

The DBJ also reiterated, “The GOJ is contemplating divesting its stake in both entities via initial public offers (IPOs) and listing on the Jamaica Stock Exchange.”

It was noted that the DBJ-based Enterprise Team and the DBJ are working hand in hand with JPSCo on the JPSCo transaction.

The Enterprise Team is also currently seeking the necessary approvals from the GOJ and the relevant regulatory agencies, it was stated.

In its 2020 annual report last year, JPSCo indicated that reduced demand within the commercial and industrial sectors, particularly the hard hit hospitality sector, led to deficits in core revenues.

However, the group’s diversification initiatives into the provision of operation and maintenance services for entities within the energy industry resulted in operating revenues totalling US$888.7 million, a less than one per cent increase against the previous year.

The JMB is the third company and government agency listed for privatisation by the Government of Jamaica. Other companies divested in the last three years include Wigton Windfarm Limited and Trans-Jamaican Highway Limited, transactions which netted the State billions from sale of shares to the public.

The JMB has remained profitable for the last six reporting years, despite some revenue fluctuations. At last report, net surplus was $72.3 million down 16.3 per cent year on year.

The 2021 public bodies report indicated that work is ongoing to effect the completion of rationalisation efforts [with] actions to be finalised in 2021/22, including “the listing of shares in relation to the operations of the Jamaica Mortgage Bank.”