Mortgage bank to be sold on the stock market
Published:Wednesday | November 10, 2010 | 12:00 AM
State-run Jamaica Mortgage Bank is being divested to private investors, and Government has decided to make the sale via the equities market.
A divestment team, to be headed by financial consultant Carlton Cunningham, has been approved by Cabinet.
Cunningham, who is also an adviser to Government on housing policy, said Tuesday that he was still awaiting his official appointment to the JMB divestment team.
He told Wednesday Business, however, that the intent was to do an initial public offering and then to have the shares listed on the Jamaica Stock Exchange and, thereafter, to cross-list.
"We are right at the beginning of the process," he said when pressed on whether an application had already gone to the Financial Services Commission, which must sign off on prospectuses before offers are made to the public.
"The fundamental objective is to have an institution which is capable of (providing) funds to support an enlarged housing programme," Cunningham said.
Functions
JMB was established in 1971 as a private limited liability company, but was converted to a statutory agency two years later. It functions as a financier of developers and private mortgage lenders, as well as provides mortgage insurance services.
In the past few years, its own operations have been funded by debt capital raised from housing bonds.
In the last fiscal year, ended March 2010, the agency had assets of J$4.2 billion and liabilities of J$2.4 billion, including J$1.5 billion of bond debt.
The bank has been in a loss position for the past two years, but has accumulated surpluses of J$430 million to fall back on.
Details on whether Government plans to retain a stake in the agency, and how much, was not immediately available; nor the amount of capital the offer aims to raise.
"In all the successful institutions, which (have been divested), the Government usually remains a minority interest for a period of time with some sunset clause," said Cunningham.
But it was still too early, he said, to say definitively what the Golding administration would do.
Indeed, no financial advisers or brokers have yet been tapped to arrange the offer.
"We will be discussing it with quite a few people," Cunningham said. "This is a big proposal ... we are going to open it to national and international (interests)."
Government hopes to complete the divestment of the mortgage agency by the end of 2011.