Keith Duncan, chief executive officer of Jamaica Money Market Brokers, says the take-up of the brokerage's preference-share issue was a demonstration of confidence in the company. - File

Jamaica Money Market Brokers (JMMB) has raised $2.524 billion from its dual preference-share offers this month, more than six times its initial target.

JMMB launched the offer at the top of the month with an announcement that it was going after a take-up of $420 million.

But it was clear from the crowds that descended on its offices during the subscription period - the offer was open from December 5 to 14 - that the prefs were seen by investors as an attractive buy.

"This is JMMB's first-ever preference-share offer and we are humbled by the overwhelming display of confidence in JMMB," said Keith Duncan, group chief executive officer.

Oversubscription

The take-up on its open-market offer 12.25 per cent cumulative redeemable prefs, priced at $2.95 per unit, amounted to 783.776 million; while on the 12 per cent prefs priced at $3 each, it was 70.774 million shares.

The offers raised $2.3 billion and $212.1 million, respectively, with the combined take-up totalling 1.46 billion shares.

"This reflects an oversubscription of 500 per cent, the largest in Jamaica's financial history, as the dual redeemable preference-share offer was originally slated to raise $420 million of equity," said Marguerite Cremin, JMMB Group marketing manager.

The equity injection will allow JMMB to strengthen its capital base and provide flexibility to fund its expansion plans both locally and regionally as it seeks to take advantage of various greenfield opportunities, Duncan said.

JMMB's has been the most successful of the recent preference-share issues by financial houses.

Mayberry Investments Limited, for example, had tapped the market for $360 million, but got a bigger take-up of $500 million.

NCB Capital Markets, who also had a rights issue earlier in the year, initially wanted $310 million, but extended the offer after investors snapped up the shares.

JMMB also plans to tap the market for more equity, but said its next foray would be in the new year.

It ventures back in February with a third offer, but has held back on the details until closer to the issue date.

Analysts in the market had recommended the offer as a buy and predicted a successful take-up of the shares.

In fact, the prediction by Tanya Powell, regional wealth manager of NCB Capital Markets, that not only would the offer have "full subscription", but the more significant buys would come from JMMB clientele, was fully realised.

Powell had called the issue as a good investment for individuals and corporate entities looking for a relatively safe, medium-term investment.

A Government of Jamaica fixed-income security with the same term to maturity would require a coupon in the range of 16.00 per cent-16.33 per cent to provide the same after-tax return, she explained.

JMMB said more than 3,155 applications were submitted across the 10 brokerage houses that participated in the offer, with 3,056 being processed by JMMB.

With a capital base of $7.2 billion, the company said it was confident it could meet its obligations in redeeming the shares, which mature in three years.

"We are completely confident in our ability to pay out," said Cremin.

sabrina.gordon@gleanerjm.com