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Another IPO is on the horizon. This time, it is the Sagicor Investments Jamaica Limited that is seeking to raise around $4 billion through an initial public offering. Sagicor Investments is offering shares in the Sagicor Select Funds Limited, which is a fund pool consisting of financial stocks that are listed on the Jamaica Stock Exchange. The public offer will open on July 3 and close on July 17, 2019.
Sagicor Investments Jamaica Limited Offers 2.5 billion Stocks
Investors can purchase a total of 2.5 billion stock units at a price of $1.00 per unit. Also, they have the choice to purchase from an additional pool of 1.5 billion stock units should Sagicor Investments Limited choose to upsize the IPO.
The Sagicor IPO consists of shares in two classes – Class A shares offered to Sagicor Investment Limited clients and Class B shares offered to members of the public who subscribe to this initial public offer. The prospectus from Sagicor Investments Limited stated that the company was structured as a passive equity fund with separate classes of shares listed as a Financial Select Fund.
JSE Financial Index Grows 18%
Presently, the Financial Select Fund has invested $1.1 billion in 11 of the 23 financial stocks that constitute the Jamaica Stock Exchange Financial Index. The funds raised from this IPO will go toward acquiring more financial stocks. Sagicor Investments Limited aims to match the financial securities that constitute the JSE Financial Index as closely as possible.
With the Financial Select Fund, investors can track the Index’s value, the net asset value (NAV) of the Fund, and its market value daily. Such information is published on the Jamaica Stock Exchange website and will be published by the Sagicor Investment Jamaica Limited.
On March 1, 2019, the Jamaica Stock Exchange (JSE) launched the JSE Financial Index. This Index consists of insurance companies, financial and microfinancing companies that are trading on the main and junior markets. On Thursday, June 20, 2019, the JSE Financial Index closed at 118 points, which represents an 18.25 percent growth since it was debuted.
While Sagicor leads the unit trust market with its Sigma branded unit trust packages, its Financial Select Fund focuses on a specific sector (financial). So, investors have the choice of specialising in a sector without suffering the accompanying concentration risk.
Why Buy into an IPO?
Investing in shares offered through an initial public offering is like entering an opportunity on the ground floor. Through this strategy, the investor benefits from significant gains once the shares hit the stock exchange. Once the IPO shares are listed on the stock exchange, it’s all systems go as the normal trading takes effect.
A quick look at the performance of some of the investment opportunities offered through IPOs from 2018 to date shows strong gains in price since they were offered to investors.
Look at this table below:
Table 1: Performance of Companies Offered through IPOs from 2018 to Date
|Company||Symbol||Date of IPO||IPO Price||Closing Price June 20, 2019||% Change|
|Elite Diagnostic||ELITE||Feb. 2018||2.00||3.95||98%|
|Everything Fresh Limited||EFRESH||May 2018||2.50||1.49||-40%|
|Fontana Limited||FTNA||Dec. 2018||1.88||4.43||136%|
|iCreate Limited Ordinary Shares||iCreate||Jan / Feb, 2019||1.01||0.8||-21%|
|Indies Pharma Ordinary Shares||INDIES||July 2018||1.50||3.21||114%|
|Mayberry Jamaica Equities||MJE||July 2018||7.56||11.31||50%|
|Sygnus Credit Investments Limited JMD Ordinary Shares||SCIJMD||May 2018||13.72||13.39||-2%|
|Wigton Windfarm||WIG||April 2019||0.50||0.84||68%|
So, as you consider whether to buy into this latest IPO, read the prospectus and talk with your broker or financial advisor.