Chris Williams, managing director of NCB Capital Markets. - File

Ashford W. Meikle, Business Reporter

Eight months after listing on the Jamaica Stock Exchange, NCB Capital Markets yesterday announced that it would seek to raise additional capital to fund its expansion by way of a renounceable rights issue of the company's preference stock.

"We are an investment bank and we basically look for opportunities to invest funds," said NCB Capital Markets managing director, Christopher Williams.

"It was always our intention to consider a rights issue and the board has now decided to pursue that."

Williams said, however, that the timing, terms and other details have not yet been decided.

The CEO said that the rights issue - which is an offer to shareholders to purchase more of a corporate stock ususally at a discount - would give investors an opportunity to invest in NCB Cap through a secure, tax-efficient product which, within the current environment of declining interest rates, would offer yield protection.

Above-average rates

"We continue to look for ways to offer to our clients opportunities to achieve above-average rates of returns, protection of their principal and tax efficiency," he said.

The market, he added, has to consider investing more outside of the traditional repo products.

Williams said that the funds from the rights issue would be invested in a similar manner to the capital raised from last year's preference-share issue.

"The first set of funds was used to invest in the securities market - fixed income and equities - and we have done well with it," he said.

"And that's we will do again. We are not into building block and steel."

Williams describes the preference-share offer as a "creative product in the market place."

Last month, Scotiabank listed its preference shares, which were offered as a bonus to holders of its ordinary shares, while two weeks ago Mayberry Investments announced its intention to bring to the market a preference-share offer.

'WILL DO WELL

Williams said that notwithstanding the current bear market, NCB Cap expects that the rights issue will do well when it opens for subscription.

"We feel that the ordinary shares equity market is weak. However, as we predicted and which has been the case, the preference-shares equities market is strong.

They are very attractive in an environment in which equities are weak because of the combined feature of equity and fixed return."

Last September, NCB Cap came to the market with 100 million preference shares at a price of $3.00 and since being listed, the stock has traded consistently between $3.15 and $3.22. BNS' preference share, which was listed at $1, yesterday traded at $1.56.

"Clearly, investors are making the distinction between ordinary equities and preference-share equities, as they should, because they are different," Williams said.

ashford.meikle@gleanerjm.com