The Main Market of the Jamaica Stock Exchange had its first listing of the year…. without an IPO!

Some of you may have noticed a new ticker on the JSE’s Main Market and are wondering when it got there. Well, Trinidad-based distribution company AS Brydens and Sons debuted on the Jamaican market on November 10.

It’s the first Main Market listing of 2023 – even though we’re in November. And if you’re starting to feel a little bit of FOMO, wondering how you missed this massive IPO… you didn’t. But let me start from the top.

AS Brydens and Sons is a giant in the distribution game. Founded in 1923, the company is one of the leading distributors of food, pharmaceuticals, hardware and industrial equipment in Trinidad and Tobago, Barbados and Guyana.

Last year, Jamaican manufacturing and distribution company, Seprod, acquired a 60% stake in the company. 

And the acquisition has been making BANK for Seprod. According to the company’s Q2 results for the six months ended June, the company has seen a 45% increase in exports, which makes sense since they now have this massive distribution network.

Also, revenues almost doubled for the period, with the company earning over $54 billion in the first six months of the year, compared to just $26 billion the year before. Seprod credited the AS Brydens acquisition for the positive growth.

Seprod’s management has always made it known that they wanted to take AS Brydens public, listing on the JSE and then eventually on the Trinidad and Tobago Stock Exchange. 

The Seprod Group itself is listed on the Main Market of the JSE, so Brydens’ performance would be accounted for there, but the company can still be listed as a separate entity since it is a subsidiary.

And like I said earlier, the company started trading on the 10th. But wait, that kinda feels like we skipped some steps… how did Brydens go from a private company to trading without an IPO? 

That’s because the company was listed by introduction. Typically, when a company wants to go public, they do an initial public offering, IPO, and create new shares to be sold to the public. With a listing by introduction, no new shares are created.  Only existing, outstanding shares are offered for trading. 

This is known as a direct listing. Companies choose to go this route for several reasons. Sometimes they might not have the money or time to go through the IPO process which can take years.  But one of the main reasons for skipping an IPO is to avoid diluting existing shareholdings. 

Like I said, an IPO creates new shares and those shares have to come from somewhere. That typically means that existing shareholders have to give up a part of their stake in the company so that those shares can go to the public. 

Seprod has a 60% stake in the company and the remaining 40% is shared among the previous owners – the Bryden, Fitzwilliam and Maingot families. Now they are selling their shares directly to the JSE.

The original listing price is determined by the overall value of the company. AS Brydens started trading at $22.50.  

But a direct listing has its risks because there’s no way to tell if people would be interested in the company and if the shares will trade. But so far, the market has responded well. At the end of November, the stock was up 31%, closing at $29.55. 

And that’s the bottom line.