The Caribbean Producers Jamaica Limited (CPJ) initial public offer (IPO) could be the largest to date for the Junior Market of the Jamaica Stock Exchange (JSE) as the company seeks to raise $400 million to $600 million from the offer.
The offer would be a minimum of 20 per cent of the company as per the JSE’s rule.
Gary Peart, CEO Mayberry Investment Limited (MIL), lead brokers to the IPO told the Business Observer yesterday that CPJ would use the funds to invest in five projects, among them a location in St Lucia, the expansion of its chemical business and increase production capabilities in the agro-processing industry. Peart said CPJ’s aim is to become integrated into the tourism sector by providing all the inputs for the hotels.
However, CPJ will aim to raise a total of US$8 million ($688 million) to US$9 million ($774 million) to undertake all five projects. The total investment will come from a combination of debt and equity. Mark Hart, director, CPJ, said that given the company’s record, banks had been competing to offer loans at “record low rates”.
“We approached them and indicated that here is an opportunity and even though interest rates are coming down on loans, equity is zero interest,” Peart said.
“With so many great opportunities ahead of us and the perfect platform in place, it would be an injustice not to take advantage of listing CPJ and turning on the booster,” noted Hart.
At the announcement of the IPO on Monday, Tom Tyler, director, CPJ said the manufacturing and processing initiative will provide additional employment within CPJ as well as within the Agro sector and provide markets for locally produced livestock.
The decision to go into St Lucia comes as a result of the strategic growth opportunities there. “With 5,000 hotel rooms we currently see St Lucia as affording the opportunities that marked Jamaica 20 years ago,” Tyler said. In addition to a $140 million upgrade of the airport in St Lucia, Tyler pointed to the additional rooms that are planned for the country, as well as the fact that CPJ’s largest institutional customer is the largest hotelier in St Lucia as among the reasons for looking at the country. He said CPJ had already located a site in the country.
“Our expansion within St Lucia will increase our overall company buying power and provide an export opportunity for our agro-processing facilities in Jamaica,” Perry said.
The investments will also focus on the expansion of a CPJ Market in Kingston to add to the services offered by the one in Montego Bay. The CPJ Market provides access to items not commonly found in supermarkets. “Our plan is to provide a larger outlet in Kingston that gives consumers greater variety and quality,” Tyler said.
The expansion of the technical services division to include chemical services to hotels- and the retail division- through an expansion of the product portfolio is also among planned investments. Tyler said acquisitions that fit CPJ’s retail business model will also be considered.
Hart said the 16-year-old company had come a long way since the first shipment of toilet paper in 1994, but still had a long way to go.
“This listing will see the company creating employment, offering more demanding roles and benefits for our team members, deepening the commitment that we already have to the only industry that can take Jamaica onto higher levels of sustained prosperity. This is a golden opportunity, one that is too obvious to waste.”