By Anthony Morgan

The Jamaica Money Market Brokers (JMMB) Group could make more acquisitions over the medium term, with the help of the $6 billion proceeds it’s seeking to raise from it’s two new preference shares which opened on February 16.

JMMB’s Chief Country Officer for Capital Markets (Jamaica), Karl Townsend, said the financial services group has plans to diversify its business lines into more regional territories to complement operations in Trinidad and Tobago and Barbados.  

In 2019, JMMB acquired a 22.5% stake in Sagicor Financial Company which also gave them an opportunity to expand their regional influence across the insurance and asset management sectors.

Townsend said the idea is to look for similar opportunities which will in turn boost investor confidence in the company while adding value to their investments.

“There are many different opportunities and we are always looking for [acquisition] opportunities.  We’re looking at other territories and I think at the appropriate time we will make that announcement and show to our clients the kind of opportunities we’re looking to take advantage of,” he said. 

JMMB’s preference shares, fixed at 7.35% and 7.15% are scheduled to close on March 9. Preference shares generally pay higher dividends than ordinary shares. In this case, the interest rates are also fixed, and will be paid monthly, starting April 19 until maturity in seven years.

Townsend said the preference share offer is more attractive for investors who want a regular flow of cash or predictable income. He said while investors buying into preference shares have limited voting rights, they have priority in terms of repayment should a company fall into liquidation.

“Preference shares are really a hybrid between ordinary shares and a bond, meaning that it has its fixed coupon rate that it pays…so contractually that dividend will normally be paid regardless, as long as the company continues to make a profit,” said Townsend.

The offer of the two preference shares is priced at $3.00 per share with existing clients benefiting from the higher interest rate. 1.5 of the 2 billion units are also reserved for JMMB clients and customers. 

“We’re giving a little extra to our existing clients,” said JMMB Group’s Chief Risk Officer, Damion Brown, who also disclosed that the company decided to make the offer at this time with growth in mind, having issued its last preference shares just 3 years ago.

“We’re in growth mode and that’s the context of the preference share. We see significant opportunities.  We have a lot of relationships and the way we have conducted operations, different companies are willing to partner with us and engage with us in terms of going forward so we’re on the growth path,” said Brown.

Brown added that investors can expect to get back their initial investment when the shares reach maturity.

“At the end we’ll redeem our shares or we could, as we’ve done in the past, issue new shares that will pay out these existing shares, but in any case, at the end of the 7 years you’ll get your initial investment back,” he said.

Mr. Brown said JMMB is positioning itself to take advantage of the opportunities arising out of the COVID-19 pandemic, and noted that the prospects for growth are good. He said while the pandemic has posed some challenges for the group, they have no plans of closing any branches. 

There are also no immediate plans to offer additional ordinary shares on the market.

“I think this [preference share] is a win-win at this point in time where customers can get an attractive fixed rate which works well for a specific customer type and portfolio decision and will still allow the company to continue on its growth strategy,” said Brown.

For its nine-month period ended last December, the JMMB Group posted net profits of $4.02 billion, which it said was in line with its earnings.

Despite a 5% decline in net operating revenues over the third quarter, the financial services company managed to close with $16.5 billion and earnings per share of $1.97.

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