Jamaica Gleaner / Wisynco Group Limited plans to offer 20 per cent of the company to investors in an initial public offering that is structured to raise $6.1 billion in total as financing for expansion of its manufacturing capacity and acquisitions.
The general public will get to take up 12.5 per cent of the offer, which will open for subscription December 6-15.
The company aims to list at $7.87 per share, which equates to a listing at 12.8 times its annual earnings in a market where its competitors are at 14.1 times earnings.
Lead broker NCB Capital Markets Limited argued that the IPO price and valuation of the company remains attractive when matched against its listed manufacturing peers – GraceKennedy, Jamaica Broilers Group and Seprod Limited.
A fair value for the stock falls within a range of $8.69 to $9.74, the broker said in a research note this week, based on estimates derived, respectively, from the dividend discount model, and peer-to-peer comparison using a 14.1 average P/E and forward EPS of 69 cents as the basis of the valuation.
The IPO will float 784.5 million shares at the subscription price of $7.87 per share, except reserved shares that are offered at a discount.
Of the 784.5 million shares, some $1.1 billion will be raised by the company in the IPO and $4.92 billion will come from proceeds from existing shareholders selling shares to other shareholders.
In its current form as a manufacturing and distribution company, Wisynco Group Limited was established in 2005 as an amalgamation of several multi-generational family businesses created by four Mahfood brothers – Ferdinand, Sam, Joe and Robin. The first of those legacy businesses began operating in 1965.
Wisynco, which now has an equity base of $7.15 billion, is one of Jamaica’s manufacturers and distributors of beverages, food and packaging products. Its sales in the year ending June 2017 grew more than nine per cent to $21.2 billion, while profit was flat at $2.2 billion.
The IPO prospectus released this week said Wisynco’s September first quarter saw improvements at the top and bottom lines, year-on-year. Sales rose 16 per cent in the quarter, and profit climbed by 11 per cent, showing recovery from the impact of a fire at the company’s St Catherine complex in May 2016, the prospectus stated.