OMNI Industries Limited’s initial public offering (IPO) closed on Wednesday as the offer was oversubscribed beyond the $500-million mark.

The IPO, which opened on May 17, had an original closing date of May 31. With the IPO now closed Omni will make an application to the Listing Committee of Jamaica Stock Exchange (JSE) in order to be listed on the Junior Market. Investors who applied for the offer should find out in the next two weeks how many shares they were successful in acquiring during the IPO. Refunds for shares not acquired would be processed in the subsequent days.

Omni is set to receive a gross amount of $250 million from the offer, which will go towards upgrading existing machinery, purchasing new equipment, and to support its working capital. Omni is looking to establish an e-commerce platform, develop new product lines, and increase its exports into other markets. The other $250 million from the offer will go to existing shareholders who sold shares in the IPO.

The research team of NCB Capital Markets Limited (NCBCM), the lead broker and existing Omni shareholder prior to the IPO, produced a report recommending investors participate in the IPO. This was supported by a target price of $1.23 which was derived from the average of three valuation methods ranging from $1.20-$1.27. The potential dividend yield of 1.36 per cent resulted in a total return of 24.37 per cent relative to the IPO price of $1.

However, the two other publicly available reports by brokers were split. VM Wealth Management Limited’s research report gave a target price of $1.47 and a participate recommendation to investors. This was derived from using the average of two valuation methods which produced ranges of $1.42-$1.52.

“With the launch of new product lines, higher production capacity from investments in new machinery, and the construction industry’s notable expansion, Omni Industries Limited expects an exciting future. Notwithstanding possible obstacles from rivalry and fluctuating interest rates, the company intends to grow into regional markets in Central and South America. Omni is well positioned to produce substantial revenue growth and take advantage of new business prospects, with a strategy focus on improving efficiency, increasing retail sales via an e-commerce platform, and exploiting stable macroeconomic conditions,” stated the VM Wealth report.

JN Fund Managers (JNFM) had a different perspective as they derived a fair value price of $1.08 from one valuation method and told clients not to participate in the IPO.

“We have an estimated fair value of Omni’s stock of J$1.08, implying that the shares are slightly undervalued and investors who invest at the IPO price could get a discount of ~8.0 per cent. However, on balance we believe the risks are skewed to the downside at this time. Based on the foregoing analysis we recommend that investors do not participate in this offer, and we assign a medium- to high-risk rating to the stock,” stated the JNFM report.