Over subscription for the 280 mllion shares on offer 

The initial public offer (IPO) of shares in Jamaican contract furniture manufacturer, JFP Limited, is now closed, having been opened only yesterday (February 21).

The early closure is due to an over-subscription for the J$280 million on offer, priced at J$1 per share. Now that the IPO has been oversubscribed, JFP, with registered office at 155 Spanish Town Road, Kingston 11, will seek to apply to the Jamaica Stock Exchange (JSE) for admission to the Junior Market.

With the JFP raising more than the J$100-million minimum stipulated by the JSE for Junior Market listing, it’s almost certain that the company will be admitted to the Junior Market having met all the other requirements.

Of the 280 million shares offered, 140 million are newly issued shares and a similar amount being sold by existing shareholders.  

Just over 111 million shares were reserved for employees and key strategic partners, while the balance of 168.4 million shares went to the general public. In his forward in the prospectus, JFP CEO Metry Seaga said he anticipated a successful IPO, which “will also allow the company to realise its strategic objective of the continuation of the expansion of its export business, which may eventually involve the company operating additional work shifts”.

Seaga noted that Junior Market listing will enable the company to take advantage of a special concessionary tax regime for Junior Market companies, provided that the company remains listed for 15 years. 

USE OF PROCEEDS

JFP Limited intends to use the proceeds to increase its working capital reserves to enable it to mobilise efficiently and take advantage of more opportunities for revenue and profit growth. The company also intends to use part of the proceeds of the fundraising to pay the expenses of the IPO which it estimates will not exceed J$25 million.

This is inclusive of financial advisory fees, brokerage fees, legal fees, auditor’s fees, statutory fees (including Registrar’s fees), initial listing fees and General Consumption Tax. If the company is admitted to the Junior Market, the directors intend to pursue a liberal dividend policy that projects an annual dividend of between 40 per cent and 80 per cent of net profits available for distribution, subject to the need for reinvestment in the company from time to time.