Jamaican bank to list in New York for US$225m

(Jamaica Observer) National Commercial Bank (NCB) has filed with the US Securities and Exchange Commission (SEC) for an initial public offering of US$225 million ($19.5 billion) on the New York Stock Exchange (NYSE).

The Jamaican financial institution said it intends to use the net proceeds for general corporate purposes, including income-generating activities such as expanding loan volume and portfolio investments, infrastructure development and acquisitions. NCB has been authorised to list for trading on the NYSE under the symbol “NCJ”. The firm’s listing will be made up of American depository shares (ADSs) — a vehicle for foreign companies to list US dollar denominated equities — consisting of a yet-to-be-determined multiple of underlying NCB shares which will be issued to its US depository, JP Morgan Chase.

The company added in an advisory to the Jamaica Stock Exchange (JSE) on Tuesday that while the offering size is “contemplated” to be US$225 million, its underwriters have an overallotment option, which could result in the increase of its share capital being higher if the offer is successful.

NCB is yet to determine pricing of its IPO. The company did not respond to queries by the Jamaica Observer up to press time.

John Jackson, financial analyst and publisher of the Investor’s Choice magazine, said the Price Earnings (PE) ratio “will possibly be around 10 or 11 times earnings” but “may well go up to 14 or 15 times current year’s earnings”.

“It depends on when they come to the market,” Jackson said, adding that RBC and Scotia are currently selling for about 11 or 12 times earnings on the NYSE.

The company could present an attractive value proposition to American investors, he said. “If you look at the growth rate of NCB’s profit, taking out the extraordinary bad debt this year, it has been in the region of 10 to 20 per cent for a while. If the Jamaican economy stabilises, the potential is that it could grow faster than that.

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