The offices of Pan Caribbean rise to the skyline in this August 2006 Gleaner photo. Pan Caribbean heads to the market with an expensive $200 per unit preference share issue on January 31. - File
Another financial house is tapping the equity market for capital via a preference share issue, but Pan Caribbean Financial Services Limited (PCFS) has set its sights at raising $2 billion.
The brokerage run by CEO Donovan Perkins is offering 10 million redeemable 12.5 per cent prefs priced at $200 per unit.
A successful take-up would approach, but not eclipse, the performance of the Jamaica Money Market Brokers issue in December, which raised more than $2.5 billion on two prefs of 12.25 per cent and 12 per cent.
It's PCFS's first preference share offer, which remains open for subscription over a month, from January 31 to February 29.
Minimum purchase per investor is 500 units.
The company in its prospectus issued Thursday said it reserved the right to withdraw the offer if subscription falls below $500 million.
PCFS is raising funds to strengthen its capital base, while allowing itself flexibility for expansion of the business. The company's biggest project currently underway is the transformation of its merchant bank into a commercial bank by mid-year.
The offer comes at a time when institutions are looking for added funds to achieve their strategic goal, remarked Clinton Brooks, managing director of investments at Stocks and Securities Limited.
"PCFS has grown their profits exponentially over the past five years and they represent further growth potential with the expected opening of their commercial bank this year," said Brooks.
Constant growth
Pan Caribbean, a member of the Barbados-based Sagicor financial group, has been growing its profits consistently within the decade, reaching $1.1 billion or $2.06 per share, at year end December 2006, when net revenues also rose to a new high of $2.27 billion.
Unaudited nine-month profit to September 2007 was recorded at $905 million.
PanCaribbean plans to list the shares on the Jamaica Stock Exchange at the close of the offer.
Its preference share would be by far the most expensive of similar securities now listed on the JSE, the closest of which would be Lascelles deMercado's 15 per cent which is currently trading at $20 per share.
Unlike the more recent pref issues by its industry peers, PanCaribbean plans to pay quarterly dividends while the others are paying monthly returns.
The offer was to have come on the market last year but the timing was not right according to PCFS senior vice-president of capital market operations, Philip Armstrong.
Armstrong expects that the issue will perform as well as its forerunners which were all oversubscribed.
Brooks also said the offer was attractive and likely to be fully subscribed, if not over subscribed.
The greater portion of the take-up is expected to be institutional investors.
"This offer seems more designed for institutional inves-tors, due to the requirements of the offer and as such we see institutional investors being the major participants in the offer," said Brooks, whose company is one of 13 brokers to the offer.
The shares will mature in five years time and are redeemable at par value of $200 per unit.
Preference issues
Preference issues have been gaining momentum in the market, based on what analysts say have been very attractive offers.
Mayberry whose initial target was $360 million from its 12 per cent prefs, raised more than $500 million in November. JMMB the last financial house in the market in 2007 raised $2.52 billion with its dual preference share offer in December.
Earlier in the year BNS had a bonus issue, while NCB Capital market had a renounceable rights issue on its 11.75 per cent preference shares that were originally issued in September 2006.
PanCaribbean's 12.5 per cent prefs would bring the numbers listed to 15.
sabrina.gordon@gleanerjm.com
