Barita's $9 billion APO to facilitate expansion
Less than a year after raising $10.3 billion in fresh equity capital, Barita Investments Limited hopes to raise another $9 billion in equity over a three-week period to facilitate the expansion of its business in line with its growing client base.
Barita’s additional public offer, which was posted on the Jamaica Stock Exchange on Wednesday, offers investors up to 173,733,220 new ordinary shares in the company - inclusive of shares for its reserved clients – priced between $49 and $52 per share.
The offer opens on Wednesday, August 26 and will close on September 16. It will see small investors getting a stake in the company for $49.00 per share while hotel workers, farmers and civil servants will be offered a share at $49.75.
Cornerstone Investor, Barita clients, existing shareholders, key investors and the general public is being offered a stake in the company at $52.00 per share. The minimum order amount is 300 new ordinary shares. Applications above that amount shall be done in multiples of 100.
Of the $9 billion to be raised, approximately $153 million is expected to be used to pay transaction costs.
Barita intends to split the remaining $8.847 billion across increasing the company’s investment banking underwriting capacity, upgrade the technology platform, seed new managed funds and expand product offerings to suit a wider range of investor profiles.
Proceeds of the funds will also be used to expand its footprint both locally and regionally as well as to develop talent, brand and operating capacity to accommodate the investment company's growth trajectory.
For the six-month financial year ending March 31, 2020, the group reported net profits of $1.0 billion, which represented a 95.9 per cent increase in year over year net profits.
This represents the highest net profit performance in Barita’s history, and came despite interruptions the investment house faced from the COVID-19 pandemic. It translated to earnings per share of $1.24, relative to a restated $0.68 per share for the comparative period of 2019.
The growth partially came from Barita’s expansion of its core business lines, a focus on efficiency and efforts to grow and diversify its revenue stream.
“While we anticipate that the crisis will present challenges for financial markets including the financial sector, Barita’s strategy will continue to be focused on sound liquidity and capital management, even as we ensure that we are well positioned to seek out value creating opportunities that we believe the current crisis will eventually unearth,” Barita said in its prospectus regarding its outlook for the future.
In September, Barita raised $5.25 billion in a rights issue, after raising just over $4 billion earlier in 2019. The funds raised allowed Barita to pursue several initiatives, including a buildout of investment banking operations and expansion of its branch network.
Barita ended the first half of 2020 with an equity base that rose 84.8 per cent or $6.6 billion year over year to close the reporting period at $14.4 billion.