THE NCB Financial Group fell short in its latest quest to raise money, pulling in $2.5 billion — around half the initial amount sought — despite the offer being extended for an additional week to June 3 to attract more investors.

NCB Financial Group went to market seeking to raise $5.097 billion through the issuance of 78.50 million new ordinary shares. It also had the option to upsize the offer to $7.649 billion by increasing the number of shares on sale to 117.75 million.

Despite falling short of the target, NCB Financial Group officials were upbeat about the outcome.

“We consider the NCB APO a success because in an environment of high interest rates and very tight liquidity, where investors prefer bonds over equity, we were able to accept over 3,000 applications. These applications came in via 10 selling agents. Now, these selling agents would have issued independent, professional valuations on NCB which priced the stock at the mid J$70’s to the low J$80’s,” stated Angus Young, chief executive officer (CEO) of NCB Capital Markets Limited (NCBCM) in a Nationwide Radio 90FM interview.

The valuation did not pull investors as expected with the stock’s price hovering below the APO price throughout the period of the issue.

Employees who applied for shares out of the pool reserved for them will receive the first 100 shares applied for, and due to it being oversubscribed, will receive a pro-rated amount of the remaining balance. All remaining investors will receive all the shares applied for. NCBFG will now apply to list these new ordinary shares on the Jamaica Stock Exchange (JSE) and Trinidad & Tobago Stock Exchange (TTSE). Investors last saw a major share issuance for NCB Jamaica in May 2002 when there was a bonus issue of 493.35 million new ordinary shares.

While a specific number of shares was not disclosed in the NCBFG press release, it is estimated that there should be 38,540,038 new ordinary shares listed on the stock exchanges. This would take the number of issued shares to 2,583,865,550 ordinary shares and be the third increase of ordinary shares in the current financial year. NCBFG started the year with 2,466,762,828 ordinary shares before issuing 77 million shares to former executives Patrick Hylton and Dennis Cohen in November and 1,562,684 ordinary shares in December and January to current and former NCBFG executives to bring the count to 2,545,325,512 ordinary shares.

This share issuance propelled Hylton and Cohen to the fourth and eleventh largest NCBFG shareholder spots. NCBFG CEO Robert Almeida was issued 884,934 ordinary shares during the first quarter (October to December) to take his direct holdings to 1,056,684 ordinary shares, while NCB Jamaica CEO Bruce Bowen was issued 196,850 shares during the same period. The increased share count was reflected in the second quarter report. NCBFG paid a $0.50 dividend totalling $1.27 billion on Monday, June 10 to shareholders on record as of May 27.

NCBFG received approval from its shareholders at its October 2023 extraordinary general meeting to issue between 300–450 million new ordinary shares in an APO. It was stated at a previous investor briefing that more than one APO could be done to achieve the full issuance of shares.

“The APO proceeds are intended to reduce debt and strengthen capital flexibility at the financial holding company. Our key operating businesses: National Commercial Bank, Guardian Insurance and Clarien Bank are all performing well and combined are contributing 30 – 40% of consolidated earnings to the holding company. At current run rates the shortfall in the raise should be generated from earnings over 4 – 6 months and is not expected to significantly impact our plans for the coming year,” Almeida stated in the press release.

The purpose of the APO was to reduce NCBFG’s debt balance and bolster the capital of the group. NCBFG, the standalone holding company, has $36.84 billion in current debt that matures between October 2023 to September 2024. Apart from cutting $8 billion in annual recurrent expenses, NCBFG extracted $10.82 billion in capital from its subsidiaries in December 2023, refinanced J$9.5 billion and US$26.63 million (J$4.11 billion) in debt and has committed to selling NCB (Cayman) Limited to Berkeley Financial Holdings Limited. NCB (Cayman) is a Class A commercial bank in the Cayman Islands and under its licence, offers domestic and international services to residents and non-residents.

NCB Capital Markets is also offering an 18-month bond seeking to raise between $7.5–$11.25 billion to refinance debt and purchase investment securities in the Jamaican market. That bond offer with an 11.25 per cent interest rate is scheduled for June 4 –20 with investors only needing $100,000 to purchase into the offer.

NCBFG’s stock price closed at J$61.95/TT$2.70 (J$61.94) on Monday, which leaves the JSE & TTSE stocks down six and 21 per cent, respectively, in 2024.

“As we look ahead, NCBFG is focused on continuing the disciplined execution of our strategies to leverage our asset base of $2.2 trillion and capitalise on our unrivalled scale across 21 countries and breadth of offerings, to create wealth for our clients, shareholders, and communities. We thank all of our supporters for their continued confidence in us,” Almeida closed as he thanked the broker community and investors for their support in the APO.