Mon | Nov 18, 2019

Sagicor Select floating second fund

Published:Friday | November 8, 2019 | 12:34 AM

Sagicor Select Funds Limited is heading back to the market with an offer of shares in a new fund that will track the listed manufacturing and distribution companies that make up the M & D Index on the Jamaica Stock Exchange, JSE.

The company is seeking to raise as much as $4 billion from the offer, which opens on November 20 and closes two weeks later on December 4.

The first Sagicor Select fund, which tracks financial stocks on the JSE, raised $6.3 billion over the summer through the issue of Class B shares in the financial fund.

The Sagicor Manufacturing and Distribution Select Fund IPO will offer 2.5 billion Class C redeemable voting and participating ordinary shares at $1 each, with the option of upsizing the offer by 1.5 billion shares.

The IPO price basically matches the $1.01 value each share would be worth on paper, based on their net asset value, or NAV, assuming full allocation of shares in an upsized initial public offering.

The company would list up to four billion units at $1, which will add to the existing 1.1 billion units held by Sagicor Sigma – taking the fund to 5.1 billion units.

A successful listing with full subscription would result in raising the NAV of the fund from $1.1 billion to $5.2 billion by December 2019. It is then projected to gradually increase to $6.7 billion by December 2023. On a per share basis, that would grow the NAV from $1.01 to $1.30 by 2023.

“The objective of the Manufacturing and Distribution Select Fund is to track the index, which measures the performance of the manufacturing and distribution companies listed on both the main and junior markets of the JSE,” said Chairman of Sagicor Select, Colin Steele, in the offer prospectus. “Investors will have exposure to companies in the food products, beverages, construction inputs, tobacco, pharmaceuticals, household products, and stationery & office equipment,” he said.

The 30 companies in the JSE Manufacturing and Distribution Index holds market capitalisation of about $1.1 trillion – led by Caribbean Cement, which represents 21 per cent of value; Wisynco Group, 18 per cent; Carreras, 16 per cent; and Seprod, 13 per cent. The M & D Index includes companies listed on the main and junior markets.

“In order to track the performance of the index, the Manufacturing and Distribution Select Fund uses a replication strategy. This means that the Manufacturing and Distribution Select Fund typically invests in substantially all of the securities represented in the index in approximately the same proportions as the index. The fund will rebalance monthly, if necessary, to maintain the appropriate balance to track the index,” Steele said.

Some 1.5 billion shares have been reserved for Sagicor Group Jamaica’s directors and Sagicor Investments Jamaica clients with brokerage accounts as of October 31. This reserved pool is also available to Sagicor Group Jamaica employees at a discounted price of $0.98 per share.

Sagicor Investments is the lead arranger and lead broker for the IPO.

steven.jackson@gleanejrm.com

Stocks on the JSE M&D Index

Main market companies:

Berger Paints Jamaica Limited

Caribbean Cement Company

Carreras Limited

GraceKennedy Limited

Jamaica Broilers Group

Jamaica Producers Limited

Salads Foods Jamaica Limited

Seprod Limited

Wisynco Group Limited

Junior market companies:

AMG Packaging & Paper Company Limited

Blue Power Group Limited

CAC 2000 Limited

Caribbean Cream Limited

Caribbean Flavours & Fragrances Limited

Caribbean Producers Ja Limited

Consolidated Bakeries Jamaica Limited

Derrimon Trading Company Limited

Everything Fresh Limited

Fontana Limited

FosRich Company Limited

Honey Bun (1982) Limited

Indies Pharma Jamaica Limited

Jamaican Teas Limited

Jetcon Corporation Limited

Lasco Manufacturing Limited

Lasco Distributors Limited

Medical Disposables & Supplies Limited

Paramount Trading Jamaica Limited

Stationery & Office Supplies Limited

Sweet River Abattoir & Supplies Limited