Margaritaville Caribbean eyes another IPO
MARGARITAVILLE Caribbean Group said it is seriously considering an initial public offering (IPO) for its Margaritaville Jamaica business and could seek between US$4 million to US$5 million in the transaction. The potential sum being sought suggests that the company is aiming to list on the Main Market. Mayberry Investments has been engaged as the financial advisor on the deal.
“We are currently in dialogue with them as to timing [to approach the market to raise the money] and best positioning,” Ian Dear, chairman of the Margaritaville Caribbean Group, told the Jamaica Observer. He said together with Mayberry Investments, the company is evaluating several financing options to raise capital to fund its growth.
“As of now we are evaluating [an IPO] to see if that is the best direction. We feel it is,” Dear outlined to the Business Observer. “We are going through a process of evaluation to see if it is the best way to raise funds and when is the best time to do so, but we fundamentally believe that is the best way to go,” he continued.
If Dear and his board decide to go through with the IPO, it would be the third company in the Margaritaville Caribbean Group to be taken public. The other two are Margaritaville (Turks), which it listed on the Main Market of the Jamaica Stock Exchange (JSE) in 2014 and Express Catering Limited, an operator of food and beverage concessions at the Sangster International Airport, which it listed on the Junior Market in 2017. He said so far he’s had nothing but a ‘positive experience’ since those companies were listed and believes he will have the same experience taking Margaritaville Jamaica public, “bringing great shareholder value to investors.” For now, he said things like the number of shares to offer, the price and when they will be offered are to be worked out, adding that market conditions will also play a role in the decision.
His citing of market conditions points to a soft equities landscape that has been hit by inflation and rising interest rates. The result is that listings have dried up. So far in 2023, only one company, One Great Studio, sought funds through an IPO and listed on the JSE. That is down from six IPOs last year as some, such as Trinidad-based Total Office which mulled a listing this year on the JSE, has seemingly put that ambition on hold.
But Dear is hoping things cool quickly enough for Margaritaville Jamaica to take advantage of the strong recovery in tourism which its stores depend on for the bulk of its revenues. Margaritaville Jamaica operates three stores, one in Montego Bay, one in Negril and the other in Ocho Rios.
“We see it as something that will be a win-win for both and our potential investors, if and when we go down that road, but we are leaning in that direction, based on our experience,” Dear said about the planned IPO.
“The timing of this decision couldn’t be more opportune. Since the COVID-19 pandemic, tourism in Jamaica and the wider Caribbean region has experienced a remarkable resurgence. Jamaica, in particular, has led the charge, welcoming an influx of visitors that surpasses even pre-pandemic levels,” he added as he labelled an IPO now as a “strategic move that mirrors the resurgence of the travel and hospitality industry in the Caribbean.”
Dear said the funds to be raised will be spent in four areas.
“I think the first thing is to enhance our existing facilities. So if we can create additional revenue opportunities to drive our existing facilities, for me that is low hanging fruits. If we make it more profitable than it is already, we enhance the revenue models in those spaces. I think that will be our initial primary focus. It is to get those spaces even more relevant than they already are,” he argued.
Enhancing those facilities is not envisioned to come only through refurbishing and renovating existing locations. The company said it also wants to spend on eco-friendly initiatives at its stores “such as renewable energy, waste reduction, and sustainable sourcing of materials, aligning with the growing demand for environmentally conscious travel experiences.”
The company has also pencilled in earmarking a portion of the funds to be raised for technological advancements, as it seeks to move Margaritaville stores into the digital age. “The IPO will enable the adoption of cutting-edge digital technologies to enhance guest services, streamline operations, and provide personalised experiences, ensuring Margaritaville Jamaica remains at the forefront of hospitality innovation.”
It also said it wants to reduce its debt to reduce interest costs and strengthen the financial health of the brand, “allowing for more resources to be invested in elevating our guest experiences and expanding operations.”
But there are no immediate plans to increase the number of Margaritaville stores in Jamaica from three. Dear said the company is, however, exploring opportunities to expand outside Jamaica, not only the Margaritaville brand, but also the Bob Marley One Love restaurant brand which is operated by its sister company, Express Catering Limited.
“We’ve come through COVID and we are on the other side and quite frankly, we are seeing growth that is ahead of 2019. So we are ahead of that already. We feel that tourism in Jamaica is going in a direction in which phenomenal growth is taking place and we want to be in a position to take advantage of all the opportunities that that represent. Even though we see some regional opportunities too, we definitely also see opportunities in Jamaica and we want to position ourselves to take advantage of them,” he said.