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VMBS prepares to launch IPO

BY KARENA BENNETT
Business reporter
bennettk@jamaicaobserver.com

Wednesday, December 06, 2017

Victoria Mutual Building Society (VMBS) will float little over 300 million shares or 20 per cent of equity in its subsidiary, Victoria Mutual Investments Ltd on the Jamaica Stock Exchange main market. The company hopes to raise just under $700 million.

VMBS which is working to become a stronger integrated financial group and a modern mutual by 2020, will open the offer on Monday, December 11, 2017, at 9:00 am and close on Monday, December 18, 2017 at 4:00 pm.

Plans are to use the proceeds from the public offer to build the company's capital base to grow its business of providing financing solutions and to capitalise on new business opportunities.

VMIL has its eyes on creating more financing solutions for Jamaica's small and medium-sized entities; a sector which has an estimated demand of approximately $20 billion per year.

The investment arm, in announcing that it will commit at least $1 billion of financing to SMEs in 2018 in either debt or equity, has described the sector as the engine for growth in Jamaica and one that has the potential to earn foreign exchange through the exporting of goods or services.

“The only problem is that we are still hearing complaints that they cannot get financing. So what we did was to dig a little further and ask the question as to what is causing this, and we found that some of these small entities are not in good standing for them to access funding. So our plan is to help those clients to raise money in the market. But to get to this place they have to organise themselves and our plan is to help to get organised. It's the first step into getting growth in Ja,” VM Group's Chief Investment Officer, Devon Barrett said.

Barrett, in responding to concerns about where the resources will come from to sustain such investment in the SME sector on an annual basis, said the company hopes capitalise on investors who no longer have the option of investing in government bonds.

“Up to five, six years ago we were still talking about the Government crowding out the private sector by being the major borrower in the market place. Where are we now; the Government has become one of the smallest borrowers in the market to the point where they are now repaying money.

“The market place now has to find its own investment opportunities, and so what we are doing is raising funds from those people who used to invest in Government paper and then used those monies to invest in the real sector. That is the plan that we have and that is why we are starting now,” Barrett said.

VMIL will invite applications for a little over 300 million ordinary shares at a cost of $2.45 per share. Just over 225 million ordinary shares will be initially reserved for priority applications to be allocated between the VM Group employees at a price of $2.08, and existing members of the VM Group at a price of J$2.33 per hare.

The offer is limited to a minimum purchase of 5000 shares and increments of 1000 units thereafter.

Victoria Mutual Wealth Management Ltd will use its own expertise for the benefit of its parent company VMIL and act as the lead broker in the IPO. The company said legal services will be provided by Harrison and Harrison while KPMG is providing auditing services.

President and CEO of VMBS, Courtney Campbell said the company has no medium term plan of converting to a commercial bank and instead has received approval from the board of directors to expand its offerings to include car loans and credit cards using the building society's current licence.