Local real estate and private equity company First Rock announced earlier this week that it had successfully raised J$700 million via corporate bonds.

A corporate bond is an investment in the debt of a business and is a common way for companies to raise debt capital.

This good news came a week after public outrage over the debacle involving its former board member Fay Hutchinson and the Airports Authority of Jamaica’s (AAJ) shareholding in the company. That was a fiasco which raised governance issues.

First Rock should have been far more vigilant.

BOND DUE IN 2026

It is hoped that it has learnt from that unfortunate experience and can move on accordingly.

This secured 7.50 per cent medium term transaction was arranged and brokered by Sygnus Capital. The bond is due in 2026.

CEO of First Rock, Ryan Reid said: “All participants are institutional investors. It shows that the capital markets are alive and well. The bond will further facilitate our regional growth strategy.”

During the week, Reid appeared on Ralston Hyman’s radio business show, ‘Real Business’ and further explained the reason for raising this J$700 million which is to pursue real estate deals in Guyana, Costa Rica, Cayman and now Dominican Republic.

This will give First Rock a regional presence.

The company will be using its properties in Jamaica as collateral for this newly raised capital.

Reid also revealed that First Rock could have raised J$900 million easily but did not feel it appropriate to sit on all that unused cash for no specific purpose.

Further announcements are expected from First Rock over the coming weeks.

Reid was articulate and fulsome. First Rock was clear on why it is raising this sum and what it intends to do with it. This should be comforting to shareholders and the market and is in keeping with how a publicly listed company should be communicating what it is doing with the capital that it raises.

FIRST ROCK TAKES TRANSPARENT APPROACH

A Jamaican investment house recently announced that it is again seeking funds, possibly from another APO, but has yet to stipulate the reason for this move so soon after hauling in billions from an APO only last year.

First Rock took a more transparent approach. This is commendable coming so soon after the misstep concerning Fay Hutchinson was revealed. It must be stressed in this regard, First Rock did not commit an illegal act or engage in an any form of chicanery – it miscalculated and should have paid greater attention to governance measures. It’s inability to do so has now brought warranted attention onto its operations.

In May of this year, First Rock entered into a binding agreement to acquire a commercial property in Cross Roads, St Andrew, Jamaica. This property is 13,303 square feet and is expected to bring in lease income.

First Rock has assets of US$35 million. It turned a net profit of US$800,000 for the first quarter, 2021.