With 4,300 New Shareholders, VMIL Aims for Greater Financial Inclusion
31 Dec 2017 | Back to News
Commits $1 billion to SMEs
Published: Sunday, December 31, 2017
The Sunday Observer
Victoria Mutual Group President and CEO Courtney Campbell (left) and group chair Michael McMorris insert the Victoria Mutual Investments Limited strip on the Main Market of the Jamaica Stock Exchange. Looking on are VM Group director Sandra Shirley (right) and Devon Barrett, VMIL CEO and VM Group chief investment officer. (Photos: Garfield Robinson)
Having set out to achieve the financial independence and inclusion of it members and potential investors, the Victoria Mutual Group is now on a mission “to become the leading Caribbean-based provider of financial services”, according to Chief Investment Officer Devon Barrett.
That journey started with the listing of Victoria Mutual Investments Limited (VMIL) on the Main Market, which took place on Friday at the office of the Jamaica Stock Exchange in downtown Kingston.
“Through this IPO (initial public offer), our mission of financial inclusion has been achieved. We have always said — you may remember our campaigning two years ago with financial independence — that we want our members, clients, investors to be financially independent,” Barrett said.
He continued: “So part of what we’ve done today is to help those members and potential clients, because we could have just injected capital internally, but we’ve decided to invite a new set of people, as Mrs Street Forrest said earlier, to invest in our business so that they can share in the benefits that will come from our business. So it is also about financial inclusion.”
From left: Devon Barrett, CEO, Victoria Mutual Investment Limited (VMIL); Peter Reid, CEO, Victoria Mutual (VM) Bulding Society Operations; Colando Hutchinson, head of capital market and wealth management at VMIL; Courtney Campbell, president and CEO, VM Group; Marlene Street Forrest, managing director, Jamaica Stock Exchange (JSE); and Michael McMorris, chairman, VM Group, raise toasts to the listing of VMIL on the JSE Main Market on Friday.
On November 29, VMIL tendered a prospectus for the purchase of 300 million ordinary shares amounting to $698 million. The IPO was opened on December 11 and one day later, the company announced via press release on the JSE website that the IPO was oversubscribed three times the intended value.
Despite being oversubscribed before the IPO was officially opened, the company decided to float the IPO for another day.
“According to the applications that had been received up to the Friday before we officially opened on December 11, we were already 100 per cent oversubscribed. In other words, the applications received had amounted to twice the 300 million shares that were on offer,” explained Courtney Campell, president and CEO, Victoria Mutual Group, in his address.
“So the question is: why did we keep it open? We kept it open because by doing that for the extra two days, we allowed many of our members, many members of the public, who were not previously participants in this local stock exchange, to get involved in owning shares in a strong Jamaican company. That’s why we did that, so now we have ended up with 4,300 new shareholders in the Victoria Mutual Group, many of whom will own shares in a Jamaican company for the very first time,” he added.
Of the shares on offer, 150 million shares were offered to the reserved group, with all investors in the class being allocated at least 200,000 units. Over 80 per cent received full allocation of shares, while others received 6.54 per cent more.
Some 2,000 public investors received at least 30,000 shares. The employee group was also fully allocated.
Over 50 per cent of all applicants were satisfied, Barrett said, explaining further the reason for the company’s success.
“We heard a number of analysts in the marketplace saying that we were underpriced and undervalued, and we should have sold the shares for a higher price. But we don’t see it that way,” the CEO of VMIL said.
Instead, Barrett said the VM Group views the move as adding value to its investors since “they’re making an investment in the future of VM” and “they are the same persons that have helped us to get to this point”.
He also attributed the success of the IPO to current economic conditions being favourable. Making reference to the economic crisis which began circa 2008, Barrett noted that the group has weathered the storms of two debt exchanges, high tax packages and Government borrowing. He noted, however, that since the Government has reduced the securities it once offered to the financial marketplace, more space has been provided for raising equity.
“It’s something [the global economic crisis] that I think we have leveraged. We have taken the opportunity to go to listing now, and we want to use the opportunity right here and now to say to those who have been thinking about this for a while to get going now. Market conditions are never always great and I think where they are now, it’s the right time. That’s why we had four listings into the last month,” Barrett reasoned.
Since then the company has changed its business model from earning 70 per cent of income from interest-bearing instruments to earning the same from diversifying its activities.
Over the past five years, Barrett said, VMIL has earned return on equity of 20 per cent, from which it paid the VM Group 55 per cent in dividends, “…so they’ve gotten a really good deal over the years and we want our current and future shareholders to benefit from the same thing”.
Still, Barrett believes the group can do even better and even more. For this reason, VMIL will be committing $1 billion — including from the $698 million raised to the IPO — to the productive sector.
“And when we say we’re investing in the productive sector, we’re not just going to go and give you a loan. We’re making equity investment into the productive sector, so small and medium-sized enterprises (SMES) will definitely benefit from what we’re offering,” he asserted, referring to SMEs as “the engine of growth” that should get going.
Like Barrett, Campbell believes that “financial inclusion goes a little further” than raising capital, but also addressing economic inequalities.
“As a nation, we have done a lot of good work in the last five or six years to manage our economy with greater discipline and we’re seeing the benefits of that now. But we’re all struggling for growth, and now that we’re pushing for growth we need to ensure that this growth is inclusive growth,” Campbell said.
BY JOSIMAR SCOTT