NCB Financial Group Limited (NCBFG) will be seeking to raise $13.65 billion over the next month through debt and equity offers, as it seeks to refinance and recalibrate its operations.

NCBFG’s highly anticipated additional public offering (APO) was announced on Thursday. The financial conglomerate will be seeking to issue 78.5 million ordinary shares with an option to upsize the offer to 117.75 million ordinary shares. The general offer price is $65 per share, with 785,000 shares reserved at $58.50 for employees of NCBFG’s direct and indirect subsidiaries residing in Jamaica. The minimum number of shares to be purchased in the APO is 100 shares, with increments of 10 units.

This means that NCBFG would raise between $5.10 billion – $7.65 billion in new capital, which would go towards reducing the company’s debt pile and bolstering the capital of its subsidiaries as it seeks to reallocate capital across the group. The minimum amount that needs to be raised for the offer to be successful is $775 million.

“NCBFG has placed considerable and deliberate focus on “future-proofing” its businesses, and in most instances the enabling strategies require some degree of patient capital,” stated NCBFG Chairman Michael Lee-Chin in the prospectus.

Some of the key parts of the future-proofing agenda include preparation for the adoption of Basel III and IFRS 17, increasing resilience to risks, enhancing the lending abilities and loss-absorption capabilities, the continued scaling of their regional platform, investing in related infrastructure, plus developing and enhancing the group’s fintech agenda under Lynk, which is operated by TFOB (2021) Limited.

NCBFG’s stock price closed at $60.82 on the Jamaica Stock Exchange (JSE) on Thursday. The stock closed Friday at $61.84 as investors bought shares between $60.85 to $64.50, with 98,273 shares changing hands over 77 trades worth $6.08 million. NCBFG’s stock price last traded on the Trinidad & Tobago Stock Exchange (TTSE) on Wednesday when 505,000 shares were traded at TT$3.00 (J$68.75).

The general offer price is currently trading at a premium to the market price on the JSE. This comes two months after AIC (Barbados) Limited, Lee-Chin’s holding company that owns his NCBFG shares, sold 22,088,688 shares at $69.45 to the National Insurance Fund. NCBFG’s stock price started 2023 at $66.18 before closing the first quarter at $65.77, far from the peak price of $76 on August 21.

It should be noted that NCBFG shareholders approved the issuance of 300 million ordinary shares, with an option to upsize to 450 million ordinary shares, at its October 31 extraordinary general meeting (EGM). Although this current APO is below that key target, it was stated at a previous briefing that more than one APO could be done to achieve the full issuance of shares.

NCBFG, the stand-alone holding company, currently has $36.84 billion in debt due between September 2023 to September 2024 relative to its total debt load of $93.51 billion. This debt was used in the past to acquire NCBFG’s controlling interest in Clarien Group Limited and Guardian Holdings Limited (GHL), with half of this debt in United States dollars (USD). Most of NCBFG’s debt was issued at fixed rates between 4.25 – 9.75 per cent, with variable rate notes attracting the weighted average treasury bill yield (WATBY) plus 2.25 – 2.50 per cent.

The issuance of new ordinary shares would also cut NCBFG’s double leverage ratio which was 125 per cent as of September 2023. NCBFG extracted $10.82 billion from its subsidiaries during its first quarter, before subsequently announcing the sale of NCB (Cayman) Limited to Berkeley Financial Holdings Limited. NCB (Cayman) is a Class A commercial bank in the Cayman Islands.

While the NCBFG APO opens on May 6, it is the same date its senior unsecured bond offer closes. NCBFG is seeking to raise between $5.5 billion – $6 billion across three tranches, which would pay interest semi-annually. Tranche A would be for two years at 11.25 per annum, tranche B would be for three years at 11.75 per cent, and tranche C would be for five years at 12.50 per cent. The offer, which opened on April 15 according to the term sheet, has a minimum subscription amount of $100,000 based on it being a highly rated debt security under the Financial Services Commission’s (FSC) exempt distribution guidelines. The bonds use of proceeds would be for debt refinancing.

It should be noted that NCBFG had a senior secured corporate bond open between February 13 to March 8 which was seeking to raise between $4 billion – $6 billion for debt refinancing. Tranche A in that offer was for two years at 11 per cent while tranche B was for three years at 11.50 per cent. This offer was only open to accredited investors who had a minimum buy-in of $100,000, along with minimum-purchase investors whose minimum buy-in was $10 million. NCBFG intended to apply to list these bonds on the JSE’s private market.

NCBFG also had a senior unsecured bond open between February 27 to March 8, seeking US$26.63 million ($4.11 billion) which would be used for debt refinancing. This offer was offering a coupon of 7.75 per cent for two years to accredited investors with a minimum buy-in of US$1,000, and for minimum purchase investors at US$65,000. NCBFG did not intend to list this bond nor the current one on the JSE, with the take-up of the last two bonds unknown.

NCBFG’s share count increased from 2.467 million shares in September 2023 to 2.545 million shares in January as it settled exit packages for several of its former executives. If the offer is fully subscribed the issued share count would increase to 2.624 million shares and would hit 2.663 million shares if upsized. The offer closes on May 26, with interested investors able to make applications at goipo.jncb.com which is the website of lead broker NCB Capital Markets Limited. A Jamaica Central Securities Depository (JCSD) processing fee of $172.50 is payable on each application.

NCBFG’s first-quarter results are due by May 15, with its subsidiary Guardian Holdings Limited (GHL) having its annual general meeting (AGM) on May 2 at 12:30 pm Jamaican time.

TTD-JMD indicative rate as of April 25: Buying $22.91540. Selling $23.17626.