The Initial Public Offer (IPO) for Dolla Financial Services made Junior Market history on Friday, receiving a reported JM$5 billion in subscriptions withing just a few hours of opening. 

The offer closed on Friday afternoon.

According to company representatives, the Dolla IPO was the largest raise in the history of the Junior Market of the Jamaica Stock Exchange, and was 10x oversubscribed. 

Dolla was only seeking JM$500 million (US$3.2 million), the maximum allowed under Junior Market rules. 

By KRM calculations, this means investors will receive an average of 10% of the shares they applied for. 

According to the prospectus, investors should expect to see the basis of allotment within six business days from the closing, which would be around June 7. 

Caribbean expansion 

Speaking on Taking Stock with Kalilah Reynolds, CEO of Dolla Financial Services, Kadeen Mairs, said the company will dedicate $250 million from the IPO proceeds towards expanding their footprint across the Caribbean. 

Dolla is a micro-financing solutions company with seven branches in Jamaica and one in Guyana. 

The company offered 500 million shares all priced at $1 each in a combined offer for sale and IPO

Mairs explained that half of the funds raised will go directly to the company for its expansion and the other $250 million will go to the selling shareholders.

While not disclosing the countries that the company is targeting, the CEO said that they have their eyes on several Caribbean countries. 

“It’s always about visiting different territories. What I can say is that we’ve visited a lot of territories; we’ve been to Panama, the Bahamas and others,” he said.

He said that Dolla has always employed a strategic approach when selecting markets to enter. He noted that the country spent several years analysing Guyana’s market before making the decision to open a location there.

“We saw the growth potential. We spent time down there to understand the culture to see if the culture is similar to ours and if we could see eye-to-eye. We wanted to see if we could operate in that space. 

Dolla rates to stay fixed

Meanwhile, Mairs sought to reassure potential investors that the Bank of Jamaica’s aggressive approach to policy rates will have little to no impact on the company’s potential for growth.

The BOJ recently raised its policy interest rate to 5% per annum, the sixth such increase as it tries to rein in inflation, which the Bank forecasts will peak between 12 and 15% by June. 

According to Mairs, Dolla operates in a different space from commercial banks and the Central Bank’s higher policy rate won’t affect how it does business.

“Our capital, we derive that from the capital market, we access that through debt or through equity,” he said.

“When we go out into the market to raise money, we do that  directly from high net worth individuals or institutions that are willing to lend at a rate of return that they want and not necessarily on what BOJ has pegged,” he added. 

Additionally, the CEO indicated that the company’s interest rates are priced with the consideration of certain risks, including inflation and the BOJ tightening its monetary policy. 

“Actually, it might be more beneficial to us when the rates go up because then a lot of people might not see the bank as being ideal and might switch to Dolla,” he added.

He however acknowledged that situations can change but said that the company always remains vigilant to market conditions and makes the necessary adjustments.

Regulation coming 

Mairs also acknowledged that the micro-financing industry has previously gotten a bad reputation, however Dolla has taken steps to become regulated by the BOJ.

“We’re currently in dialogue with the Bank of Jamaica and we’re in the process of acquiring our money lending license,” he said.

He also noted that the company previously operated a cambio and is used to operating within a regulatory framework. 

“We have a strong corporate governance and we have our compliance team in place… the Money Lending Act seeks to create some form of transparency and AML (anti money laundering) compliance and we already had those manuals,” he added.

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