PM says Wigton IPO is not 'trickle down', it's 'bottom up'Sunday, April 14, 2019
BY BALFORD HENRY
Having given back some $14-billion in reduced and abolished revenue measures in the 2019/20 Budget to stimulate higher growth figures, Prime Minister Andrew Holness is now urging Jamaicans not to be afraid of “making a profit”.
But, it is not about the usual capitalist exploitation of the country's wealth, neither is it the kind of market economy which leaves the average Jamaica impotent in the provocative climate of wealth creation, nor even “trickle down” economics but a deliberate “bottom up” strategy that ambitiously seeks to grab the attention of the entire population.
“This is the best way of giving back to the people of the country, this is the best way of achieving the goal of socialisation of wealth,” Holness told the guests at Tuesday's Wigton Breakfast Briefing at the Jamaica Pegasus in New Kingston.
To kick-off the sale of some 11 million shares, including 2.2 billion reserved for public sector workers and offered at a sale price of just 50 cents with a ten per cent limitation on shareholding.
According to Holness, there is confusion operating in the minds of some individuals that placing shares on the Jamaica Stock Exchange (JSE) “is a way of making the rich richer”.
“It can no doubt be, but in a democratic society and a properly regulated market it is the best way of socialising wealth. In a modern sense it is better than socialism,” the PM added.
“Our economic strategy is economic independence and, for that, we need the ability of the country and, indeed, its citizens to make decisions in exploring economic interests without having to consider what holds, or what will lose if it acts or does not act in a particular way,” he noted.
“Presently, we genuinely cannot say that we are fully an economically independent country; and here are again those who confuse two things: one is our political independence; and (2) our economic independence,” he argued.
“What we are about ultimately is to secure our political independence, and the best way to do that is by securing our economic independence, and to do that we must push wealth into the hands of the people: So, our strategy is not poverty alleviation. Our strategy is not about welfare. Our strategy is wealth creation and I know that in the minds of many Jamaicans there is a fear almost that wealth creation is synonymous with exploitation.
“Again, we have to get that out of our psyche, out of our way of thinking. Jamaica is destined to be a rich country, and we must never be afraid of wealth. We mustn't be afraid of making a profit: profit is a good thing,” he stated.
He added that Tuesday was a great day, as it marked the first step 'towards the socialisation of wealth in the country, and there would be more to come, starting next with the Jamaica Mortgage Bank and including the Government's 20 per cent share in the Jamaica Public Service Company.
Wigton, in the meantime, is expected to receive approximately $5.1 billion from the sale of the shares, after deducting expenses and is offering a dividend not exceeding 25 per cent of net profits after tax, as it continues to pay down its debt.
The Prospectus was registered on April 8 and published the same day. The sale opens on Wednesday, April 17 at 9:00 am and is scheduled to close on May 1 at 4.30 pm. However, Wigton's parent company, the Petroleum Corporation of Jamaica (PCJ), reserves the right to close the application list earlier, upon on giving prior notice and may extend the closure in certain circumstances.
The general public is being offered the shares on the Government's “bottom-up” principle, in tranches of 10,000 shares until the reserves are fully allocated and/or all reserved share applications are met in full.
However, allocation will not be on the “first come first served basis”. Instead, shares will be allocated after close of the application list, when all the valid applications have been received.
Shares will be allocated in two stages.
(a) First, Reserved Share Applicants will be allocated Shares on a “bottom-up” basis in tranches of 10,000 shares until the Reserved Shares are fully allocated and/or all Reserved Share Applications are met in full.
(b) Second, members of the general public will then be allocated Shares on a similar “bottom up” basis in tranches of 10,000.
According to the Prospectus, “bottom up” basis means that all Applications (large or small) up to the first 10,000 Shares will be met. Applications in excess of 10,000 will then be met in similar fashion in increments of 10,000 until all applications are met or all the Shares are allocated.
Notwithstanding the foregoing PCJ reserves the right to make adjustments to the general allocation policy to ensure fair and equitable allocation with an emphasis on a wide distribution of the shares especially among retail applicants.