Sterling Investment to seek funding via rights issue

BY STEVEN JACKSON Business reporter jacksons@jamaicaobserver.com

Wednesday, January 28, 2015    

Sterling Investment Limited (SIL) plans to hold a rights issue by March in order to raise capital.

It would represent the first public round of funding since the company went public last October.

“We haven’t determined the size yet, but it would be a non-renounceable rights issue of ordinary shares,” stated an SIL manager knowledgeable on the matter but who opted to speak on condition of anonymity because of company protocol.

Sterling listed by introduction its 4.01 million ordinary shares on the Jamaica Stock Exchange (JSE) at a price of $134 per share.

“It was a listing by introduction… and now we are doing the rights issue to raise capital for the first time since the public offer,” added the manager.

SIL previously raised cash in December 2012 with a private placement. It offered investors a $10-million minimum to buy-in the private placement.

SIL indicated that its investments in 2014 “outpaced the performance of local Jamaican dollar investment products”, yielding returns of 11.56 per cent up to September 2014. Other high-profile funds have yielded from 5.35 per cent to 8.2 per cent over the same period, it added in a release.

Sterling Asset Management Ltd (SAM) holds over $20 billion in assets under management. SAM manages SIL funds for a fee of some two per cent. The investment strategy primarily focuses on overseas financial instruments, primarily fixed-income securities that are traded on global capital markets.

Turning to opportunities in 2015, SAM chief executive Charles Ross noted that a ‘strong rally’ in US treasuries suggests that US interest rates may rise later than initially expected and that European economic weakness would persist, while commodity price declines could dampen inflation expectations.

“Attractively priced bonds provide good investment opportunities, and European Central Bank Quantitative Easing should bolster the market,” Ross commented while speaking at the company’s annual customer appreciation function last Thursday. “Our focus will be on bonds that offer the best risk-adjusted returns in the global marketplace.”

CAPTION

CHARLES ROSS, chief executive of Sterling Asset Management

View the original article here

Sterling Investment to seek funding via rights issue

Sterling Investment to seek funding via rights issue

BY STEVEN JACKSON Business reporter jacksons@jamaicaobserver.com

Wednesday, January 28, 2015    

Sterling Investment Limited (SIL) plans to hold a rights issue by March in order to raise capital.

It would represent the first public round of funding since the company went public last October.

“We haven’t determined the size yet, but it would be a non-renounceable rights issue of ordinary shares,” stated an SIL manager knowledgeable on the matter but who opted to speak on condition of anonymity because of company protocol.

Sterling listed by introduction its 4.01 million ordinary shares on the Jamaica Stock Exchange (JSE) at a price of $134 per share.

“It was a listing by introduction… and now we are doing the rights issue to raise capital for the first time since the public offer,” added the manager.

SIL previously raised cash in December 2012 with a private placement. It offered investors a $10-million minimum to buy-in the private placement.

SIL indicated that its investments in 2014 “outpaced the performance of local Jamaican dollar investment products”, yielding returns of 11.56 per cent up to September 2014. Other high-profile funds have yielded from 5.35 per cent to 8.2 per cent over the same period, it added in a release.

Sterling Asset Management Ltd (SAM) holds over $20 billion in assets under management. SAM manages SIL funds for a fee of some two per cent. The investment strategy primarily focuses on overseas financial instruments, primarily fixed-income securities that are traded on global capital markets.

Turning to opportunities in 2015, SAM chief executive Charles Ross noted that a ‘strong rally’ in US treasuries suggests that US interest rates may rise later than initially expected and that European economic weakness would persist, while commodity price declines could dampen inflation expectations.

“Attractively priced bonds provide good investment opportunities, and European Central Bank Quantitative Easing should bolster the market,” Ross commented while speaking at the company’s annual customer appreciation function last Thursday. “Our focus will be on bonds that offer the best risk-adjusted returns in the global marketplace.”

CAPTION

CHARLES ROSS, chief executive of Sterling Asset Management

View the original article here

Sterling Investment to seek funding via rights issue

Are "preferreds" your preferred investment option?

With Kevin Richards

Sunday, October 12, 2014    

WITH increased volatility in financial markets, particularly over the last five years, people have begun to take greater stock of what their risk appetite is. For the boom years prior to the near financial market collapse in the US, people were prepared to look outside of what is traditionally consistent with their risk appetite and had ventured into new realms.

Pensioners were buying derivatives they didn’t understand and young professionals were caught up in get-rich-quick schemes resulting in huge financial losses and the loss of wealth for many. Ordinary share prices over that period plummeted to new lows, but have now recovered because of persistent Fed easing.

However, the likelihood of the Fed raising rates in the near term could send stock and bond prices back in a tailspin. One possible option for investors to consider would be preferred shares or preference shares.

Preference shares or preferreds, as they are commonly termed, are a hybrid security with characteristics of both ordinary shares and a corporate bond. They do not carry voting rights as do ordinary shares, and most preferred shareholders are never present at stockholder meetings or AGMs.

They have a higher rank than ordinary shares in the distribution of cash, whether as regular dividends or from liquidation of assets. However, such distribution is usually limited by the terms of the preference shares, such as a fixed coupon. Preferreds may have other features such as being callable, that is the issuer, at its discretion, may decide to redeem the shares prior to maturity.

In addition, preferreds may be listed on an exchange to allow the holder the ability to acquire or dispose of shares as long as there is a willing seller and a willing buyer.

There are various types of preferreds, the more popular ones being: cumulative, convertible, participating and perpetual. Cumulative prefs allow the issuer to accumulate dividend payments in the event the company’s cashflow is not able to handle a payment.

All dividends that are due would be accumulated and when cashflow improves a lump sum payment would be made. Other types include participating preferreds, which allow the holder of the shares to participate in further cash distribution above and beyond the coupon payments. This could be in the form of a set percentage of net profits or a sum above a particular predetermined hurdle rate.

The type of preferred stock that most closely mirrors common equity would be a perpetual preferred or a “perp” where there is no set maturity date. Like a common stock, it will pay cash distribution to perpetuity or until the company is wound up.

One of the more popular types of preferreds is the convertible, which, as we mentioned earlier, allows the issuer, at their discretion, to convert the preferreds to common equity or through the occurrence of a target event. In some markets, a unique type of preferreds called a retractable preferred exists, which allows the holder of the shares to put the share back to the issuer to be redeemed either for cash or for common shares.

The accounting treatment of preferreds is also a very simple one. Preferred shares are usually reflected in the company’s shareholder equity and not as debt, because although there may be fixed coupon payments, such payments are not guaranteed and sometimes are accumulated. This could allow some companies to meet target debt : equity ratios to meet specific regulatory requirements.

Some of the negatives of preferred shares include the inability to participate in the upswing in the performance of the company. Common shareholders would benefit from capital appreciation if the demand for the company’s stock rises because the company’s performance outpaces expectations.

This benefit could also extend to higher cash distribution in addition to regular dividends, while preferred holders and bond holders only receive a fixed coupon payment, no matter how well or how poorly the company performs.

Liquidity can also be another drawback for investing in preferred stock, as opposed to common shares or even a bond. Often, preferreds are held by a smaller group of individuals and the level of trading in these shares tends to be

less than trades in

common shares.

On the positive side, there could be more favourable tax treatment for preferreds, over holding a bond whereby interest is taxed at a higher rate than the rate paid on dividends. Additionally, yields on preferreds could compete favourably with the yields on corporate bonds, which also makes them a good option for any portfolio.

Expect to see more preferreds being issued as companies find more creative ways of raising funding outside of traditional common equity and debt.

Kevin Richards is vice-president, sales and marketing at Sterling Asset Management Ltd. Sterling is a licensed securities dealer and provides investment management and advisory services to the corporate, individual and institutional investor. Feedback: If you wish to have Sterling address your investment questions in upcoming articles, please e-mail us at: info@sterlingasset.net.jm or visit our website at www.sterling.com.jm

View the original article here

Are "preferreds" your preferred investment option?

Vision 2030 inspires J$5-billion investment

The Jamaica Social Investment Fund (JSIF) continues to be guided by Vision 2030 and has focused on projects designed to contribute to achieving those goals.

These were implemented through projects valued at J$1.9 billion in the last fiscal year, Scarlette Gillings, JSIF managing director, revealed at the annual general meeting of the fund recently.

Gillings said despite the continued fiscal constraints, 74 sub-projects were completed during 2013-2014 under nine project portfolio areas.

She said that expenditure for the financial year under review reflected heavy investment in inner-city renewal, evidenced by three projects – the inner-city Basic Services Project, the Poverty Reduction Project II and the close out of the Jamaica Social Development Fund Grant that focused exclusively on volatile and vulnerable communities – accounting for 46 per cent of total sub-project disbursements.

“There was also strong emphasis on rural development, evidenced by the Rural Economic Development Initiative, Community Investment Project and the Basic Needs Trust Fund six projects, which accounted for 29 per cent of project disbursements,” she stated.

In the fiscal year 2013-14, JSIF also oversaw the completion of five projects which, over an eight-year span, collectively disbursed more than J$5.2 billion that directly benefited over 129,900 underserved persons in selected communities across the island.

Strong support

Gillings further noted that the current JSIF portfolio strongly supports the GOJ’s strategic priorities to 2015-2016, under the four priority areas: job creation and economic growth; improved security and safety; human capital development and effective social inclusion.

View the original article here

Vision 2030 inspires J$5-billion investment

JP deepens investment in port ahead of doubling of wharf capacity

MICHAEL Lee-Chin made more than double his investment in Kingston Wharves Limited (KWL).

Having paid $610 million (US$10 million) for a chunk of the cargo handler a decade ago, Lee Chin, through his majority-owned National Commercial Bank (NCB), offloaded the shares for $3 billion (equivalent to US$26 million) on Wednesday.

NCB indicated that it reviewed its investment holdings and concluded the KWL fell outside its core strategic priorities at this time.

For Jamaica Producers (JP), which is now the largest shareholder in KWL, the deepening of its investment in the container handler stands to yield significant benefits to the food conglomerate when planned expansion at the Kingston port doubles capacity at the wharf.

“We believe that Kingston Wharves has the right combination of assets and stakeholders to play an important role in the development of Jamaica’s logistic sector and that has motivated us to deepen our investment,” Jeffrey Hall managing director at JP told Caribbean Business Report.

JP on Wednesday acquired $1 billion of the shares sold by NCB. Seaboard a global food, energy and transportation company listed on the New York Stock Exchange purchased $2 billion worth of shares or 21 per cent.

It resulted in JP becoming the largest shareholder in the wharf, which is amongst the island’s busiest. The acquisition increased JP’s ownership from 30 to 42 per cent.

Hall hinted that the stock price could increase with the development but did not give targets.

“We believe it will be satisfactory. We look at the blended share price and the future trajectory for that share price,” he said.

The stock traded up 29 per cent on Wednesday to $6.50 but hasn’t been able to break beyond the $8 mark in at least two years. It follows a 52- week low of $4.90 and $4.50 in 2013.

The development also seeks to raise the return on equity (ROE) for the cargo handler. ROE hit 6.58 per cent for its latest financial year ending 2013, but typically hovers around five per cent at the port operator, which KWL management explained reflected the capital-intensive nature of the business.

“The transaction demonstrates our commitment to building logistics as our core business alongside our work to build the specialty foods group,” said Hall. “We now see logistics as part of our core.”

In 2012, KWL raised $1.8 billion by selling a 25 per cent stake in the cargo handler to Jamaica Producers Group (JP) at the beginning of the year to finance the expansion plans.

Kingston Wharves’s terminal has a 1.7 kilometre continuous quay that provides nine deep-water berths for roll on-roll off, lift on-lift off, general break bulk, containerised cargo and bulk cargo vessels.

JP, a specialty foods and logistics group operating in the Caribbean and Europe, holds some $5.9 billion in equity.

Hall indicated that the purchase of the NCB shares would be financed by a mixture of debt and equity.

Seaboard is now the second largest shareholder in KW.

Through its Seaboard Marine Division, it operates a containerised shipping service between the United States, the Caribbean Basin, and Central and South America. Seaboard operated as a customer of KW for decades, the company indicated in a release.

KWL will invest US$70 million in a three-part expansion to double its throughput to one million 20-foot equivalent units (TEUs).

It is aimed to prepare the cargo handler for Caribbean or Chinese competition.

Phase one entails building a modern 24-hour logistics complex with modular warehouse space, the acquisition of gantry cranes, the closure of Third Street, the relocation of berth 7 warehouse to a newly refurbished facility, the relocation of transshipment and domestic car parks, and the demolition of on-dock warehouse and operational buildings.

The second phase will allow the port to handle larger post-Panamax vessels including extending the berth by 50 feet, dredging along the berth to over 15 metres, along with the installation of new cranes. Phase three includes expanding the port and motor vehicle trans-shipment operations to drive TEU throughput.

KWL’s current capacity stands at roughly 500,000 TEUs, management told CBR at its annual general meeting in June.

It actually handled some 204,200 trans-shipment TEUs and 90,870 domestic TEUs in its latest financial year, according to its 2013 annual report.

View the original article here

JP deepens investment in port ahead of doubling of wharf capacity

Jampro pushing for diversification of investment options

Jampro, Jamaica’s investment promotion agency, declared on Tuesday that it is pushing to diversify the areas in which the country attracts foreign direct investments (FDI).     
That assertion came in the wake of a World Investment Report, which shows a high concentration of  FDI’s in 2013, going to the country’s tourism sector.   

Milton Samuda, Chairman of  Jampro, is confident that there will be diversification of investment options in the future, but he is cautioning that, if this is to happen, the government must remove the red tape associated with doing business in Jamaica.

He contends that “government’s bureaucratic processes must not hold up  legitimate applications at any level, in any industry.”

According to the Jampro Chairman, “it is far better that efficient government be waiting on investments, than impatient investors be waiting on inefficient government.”      
Jamaica recorded US$560 million in FDI inflows last year, which was the highest it had been in five years.  

View the original article here

Jampro pushing for diversification of investment options

JMA urges govt to implement policies to stimulate investment

Latest News

Friday, August 23, 2013 | 3:17

KINGSTON, Jamaica — The Jamaica Manufacturers’ Association (JMA) says it is encouraged with Jamaica’s passing of the first International Monetary Fund (IMF) test and lauded the Government and the independent oversight committee headed by Richard Byles, for ensuring that the nation was “on the right track”. The JMA in a statement Friday said it is “appeased that Jamaica’s fiscal performance exceeded projections and urged Government to continue on the path to ensuring that the pillars of the IMF agreement are met”.However, the Association said that while the Government had achieved this mark, it is calling for the implementation of policies that will stimulate investment, create well-needed employment and put Jamaica on a path for growth, as this was the real measure of success.Like our Facebook page https://www.facebook.com/jamaicaobserverFollow us on Twitter https://twitter.com/JamaicaObserver

HOUSE RULES

1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper – email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don’t use the comments to advertise. However, our advertising department can be more than accommodating if emailed:mailto:advertising@jamaicaobserver.com.

6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.

7. Lastly, read our Terms and Conditions and Privacy Policy

comments powered by

View the original article here

JMA urges govt to implement policies to stimulate investment

Tax-free investment product targets credit union members

CREDIT union members now have access to a specially designed tax-free investment product being hailed as “habit and lifestyle changing”.

The product, the MoneyBuilder, was rolled out on June 12, when four of the island’s credit unions collaborated with MoneyMasters Limited to introduce the instrument to their membership. This collaboration is a first of its kind for credit unions whose products have over the years been developed internally, by CFMG Life or by the Credit Union League.“The MoneyBuilder is a product that can transform this generation and generations to come,” said Fitzgerald Rowe, who chairs the investment management committee of pioneer credit unions that include St Elizabeth, COK Sodality, St Catherine and St Thomas credit unions.He was speaking at the launch at the Terra Nova Hotel. According to Rowe, the MoneyBuilder puts credit union members, totalling 950,000 persons across the island, on the road to becoming financially independent as it seeks to place Jamaicans in a position where they are not dependent on anyone for their financial existence.The MoneyBuilder enjoys tax- free status as under the approval given by the Ministry of Finance, money invested in the MoneyBuilder, once held for five years, is tax-free from month one to month 60. The product welcomes a lump sum either at start-up or annually on the anniversary date. But a monthly payment, which can be as low as $500, is mandatory.The MoneyBuilder is covered by the insurer of the Credit Union Movement, CMFG Life Insurance Company, and includes coverage for disability. It insures each saver’s goal so that if a member dies before the investment matures, the beneficiary would still achieve the goal.In terms of product management, the MoneyBuilder is offered by partnering credit unions, and MoneyMasters is not a retailer. It would, however, be responsible for the quarterly filing to the Tax Authority of Jamaica.The company has non-discretionary management of the majority of the funds and will be governed by and reports to the investment management committee which is made up of credit unions.Rowe noted that, with the MoneyBuilder, all Jamaicans have the opportunity to be financially secure and can meet their financial obligations “even in death”.He added that the product was structured and approved so that it would create lifestyle changes.The MoneyBuilder presents an ideal opportunity for credit union members to access a long-term, tax-free amortised investment instrument with goal protection, he said.Education Minister Ronald Thwaites (centre) converses with President of MoneyMasters Limited (MML) Claudette Crooks Collie (2nd left), during the launch of the entity’s MoneyBuilder investment product on June 12 at the Terra Nova Hotel, St Andrew. Looking on are General Manager, St Elizabeth Cooperative Credit Union Limited Fitzgerald Rowe (left); MML Director Christopher Robinson; and General Manager, St Catherine Cooperative Credit Union Limited, Sandra Thompson. (PHOTO: JIS)

View the original article here

Tax-free investment product targets credit union members