Alliance IPO to top $500m
Published:Friday | January 31, 2020 | 12:15 AM
MoneyGram superagent and cambio operator Alliance Financial Services Limited will be offering its shares in February and listing on the main market of the Jamaica Stock Exchange, JSE.
“We are definitely raising over $500 million, but I cannot say anything more,” said Peter Chin, president of Alliance Financial. “We expect to get increased business, visibility and a lot more creditability arising from the listing,” he told the Financial Gleaner this week.
The fundraising target eliminates the junior market for listing as those IPOs are capped at $500 million.
Alliance Financial has operated a remittance and cambio business since 2004. Chin declined to comment on what the equity capital was earmarked for until the offer prospectus is approved by regulators.
He did say that the company made a return on average equity of 55 per cent in 2019, which signals the cash-rich nature of the business. Additionally, over the last five years, revenues grew at a compounded annual growth rate of 31 per cent.
Alliance Financial is controlled and operated by the Chin family. Peter Chin and Vice- President Robert Chin control at least three companies under the Alliance banner, but only Alliance Financial will come to market. The other companies which will remain private are Alliance Investment and Alliance Payment Services.
“We will consider listing other companies at a later date. But it depends on how this first listing goes,” Peter said.
The cambio sector, comprised of foreign exchange traders, is heavily regulated by the Bank of Jamaica and, he added, the rules keep changing.
“But we have a strong and growing presence in the foreign exchange business. I would say that if other cambios are having issues, those issues are localised to them,” he said.
The Alliance IPO is being brokered by JMMB Securities Limited.
“I cannot comment on the size of the listing, but you can extrapolate,” said Karl Townsend, JMMB Group’s chief country officer for capital markets in Jamaica.
“The business has been operating for the past 16 years and the owners want to monetise that value,” he said, while noting that the cambio business remains the dominant revenue driver for Alliance Financial.
A number of companies have chosen to go public via the junior market in recent years to take advantage of the 10 years of tax breaks that come with such listings. However, fundraising on that market tier is capped at $500 million. Since 2017, new market entrants have been trending towards the JSE Main Market where, prospectively, they can raise billions of dollars, or greater quantums than the expected 10 years of back-end tax savings that junior listings are allowed.
Townsend said the Alliance prospectus is before the Financial Services Commission for review and approval, but he expects the offer document to be released to the public by mid-February.
Alliance operates from New Kingston, and has another four outlets at Liguanea, Kingston; Mandeville, Manchester; May Pen, Clarendon; and Portmore, St Catherine. As a MoneyGram agent, its remittance business line is also supported by 68 subagents nationwide.