Jamaica Gleaner / VM Investments Limited (VMIL) plans to offer $1 billion in lending to small and medium-sized enterprises (SMEs) in a bid to grow its loans portfolio, a venture that will be partially financed from funds raised in its initial public offering (IPO) planned for later this month.
“We are raising funds aimed at providing capital for small and medium enterprises. We would provide capital to these entities in either the form of debt or equity,” said Devon Barrett, chief executive officer (CEO) of VM Wealth, in an interview with Wednesday Business .
VMIL views the micro-lending market as a $20-billion-a-year industry with space for innovative players. Loans to the SME sector are usually repaid over the short term and are unsecured.
“We are not late to the market, and we hear complaints from persons in the SME sector every day. So we will use [some of] the money raised in the initial public offering to offer more creative ways to finance the SME sector,” stated Barrett. “We think that the current lenders are not providing creative solutions to the public.”
VM Investments aims to raise $690 million in its IPO in an effort to list on the main market of the Jamaica Stock Exchange (JSE). The IPO opens on December 11 and closes on December 18.
The company plans to use the proceeds for working capital and to take advantage of new business opportunities, according to its prospectus. VMIL plans to list the shares at $2.45 and invite the public to purchase up to 300,005,000 ordinary shares.
The listing price represents roughly nine times its historic earnings, which compares with 17 times for companies in the financial sector on the JSE main market. Essentially, offering the shares to the public is at a discount.
“We want to encourage financial inclusion,” explained Barrett, adding that the future multiple drops to eight times earnings when asked about the pricing. “We want to create opportunities for team members and to offer the stock at a fair and reasonable price so persons will benefit from the upside.”
Victoria Mutual Building Society (VMBS) holds 100 per cent of the 1.2 billion units. After the IPO, shares will expand to 1.5 billion, with VMBS holding 80 per cent and the public holding the remaining 20 per cent. Five of that 20 per cent will be offered to the general public, another five per cent to employees, and 10 per cent to VMBS group members.
VMIL has been a member of the JSE since 1994, operating as a licensed securities dealer. Since 2011, VM Wealth has diversified its revenue streams away from fixed income and securities trading to becoming active in the asset management and capital market space, with a range of products and services. This has resulted in VMIL now earning approximately 70 per cent of its revenue from non-interest income sources.
“These shares represent 3,005,000 opportunities to be part of our mission to do more than create wealth,” according to the prospectus for the IPO. “Investors in VMIL will play a vital role in helping local companies realise their growth potential. You become a positive economic catalyst for Jamaica and, in so doing, you also gain from this growth as it bolsters the value of the VMIL stock in your portfolio,” it added.
The company earned $273 million in net profit on revenues of $558 million for the nine-months ending September 2017. That equated to a 14 per cent dip in net profit year on year.
VMIL balance sheet totals $16.3 billion, with total equity standing at $1.62 billion, up from $1.36 billion a year earlier.
RETURN ON EQUITY
The company’s return on equity and return on assets improved from 14.3 per cent and 1.29 per cent in 2012 to 19.64 per cent and 1.95 per cent in 2016, respectively, over the five-year period. VMIL said the return on equity had a low of 14.32 per cent in 2012 and a high of 22.80 per cent in 2015.
“As part of the VM group’s strategic goal of being a strong integrated financial group, in 2017, the recapitalisation of VMIL was initiated as a vehicle to facilitate corporate lending and investing to support well-run Jamaican businesses,” stated the prospectus.
“To date, VMIL has successfully raised J$500 million of debt by way of a private placement,” it said. “We are now embarking on another round of fundraising through this offer to widen revenue streams and tap into existing opportunities in the corporate lending landscape. VMIL will offer a range of products, including margin loans, insurance premium financing, lease financing, underwriting services and secured corporate loans, managed by the financial expertise of the VM Wealth team,” added the prospectus.
CARACAS.- La espera terminó y los Rays de Tampa Bay, en teoría, reforzaron la posición que menos le estaba aportando a la ofensiva con el regreso del criollo Wilson Ramos a las mayores. ?Estamos felices por tener a Wilson Ramos con nosotros? , dijo Kevin Cash a MLB.com. ?Me imagino que probablemente tenía algunas inquietudes…
La compraventa de inmuebles como Torre Agbar, Xanadú y el Edificio España aumenta un 70% la inversión en el primer semestre hasta los 6.000 millones de euros. La inversión inmobiliaria vuelve a registrar cifras récord en el mercado español. A falta de apenas cuatro días del cierre del semestre, la compraventa de edificios y solares…
san fernando Prime Minister Dr Keith Rowley prayed with members of the Muslim community and distributed zakat (charity) to the needy as he celebrated Eid-ul-Fitr at two masjids in San Fernando yesterday. He attended the Eid services on an invitation from Minister of Local Government Kazim Hosein, who is also referred to as a…
gasparillo The mother of a disabled child was shot dead inside her apartment in Gasparillo yesterday. Ornella Philips, 28, was shot once in the chest. Her body was discovered lying in the living room around 10 a.m. The country’s murder toll now stands at 243. Her eight-year-old daughter, Kayla, has cerebral palsy and depends…
ISTANBUL (AP): Turkish police stopped activists for lesbian, gay, bisexual, trans and intersex rights from gathering in large numbers for an LGBT Pride event in Istanbul yesterday, but smaller groups made impromptu press statements, defying a ban imposed by the governor. Organisers of the 2017 Istanbul LGBTI+ Pride had vowed to march in central Taksim…
LONDON (AP): The list of high-rise apartment towers in Britain that have failed fire-safety tests grew to 60, officials said yesterday, revealing the mounting challenge the government faces in the aftermath of London’s Grenfell Tower fire tragedy. All of the buildings for which external cladding samples were so far submitted failed combustibility tests, Communities Secretary…
BAHAWALPUR (AP): Alerted by an announcement over a mosque’s loudspeaker that an overturned tanker truck had sprung a leak, scores of villagers raced to the scene with fuel containers yesterday to gather the oil. Then the wreck exploded, engulfing people in flames as they screamed in terror. At least 153 men, women and children were…
WASHINGTON (AP): Making a final push, United States President Donald Trump said he doesn’t think congressional Republicans are “that far off” on a health overhaul to replace “the dead carcass of Obamacare”. Expressing frustration, he complained about “the level of hostility” in government and wondered why both parties can’t work together on the Senate bill…
While reliving the horrors experienced by so many families after another spate of bizarre violence across the country last week, I couldn’t help but picture Tourism Minister Ed Bartlett’s rictus grin plastered on television screens while the elderly and even suckling babes were being gruesomely slaughtered inside their homes. While the rest of us were…
- 13 December, 2017 New Venezuelan oil minister: Gas for T&T by 2022*
- 13 December, 2017 Consider regulating bank fees*
- 13 December, 2017 Moody’s: Climate change threatens T&T’s credit profile*
- 13 December, 2017 Is Mr Lee-Chin’s offer disrespectful?*
- 13 December, 2017 Infant girl dies during shooting involving soldier
- 13 December, 2017 Annie Paul | Art and artifice
- 13 December, 2017 Renaissance returns with epic Christmas party
- 13 December, 2017 Heart Institute adding new wing, national network of heart stations
- 13 December, 2017 Aubyn Hill appointed EGC chief executive – Targets 2.3 per cent growth by next year
- 13 December, 2017 Plans being finalised to accommodate Christmas shopping and vending