The Wigton Wind Farm IPO – Reading on and between the lines
THERE was increased traction for the Wigton Windfarm IPO among investors on Friday morning even as the offering has already received 10,000 applications and is scheduled to close in a few days – Wednesday, May 1, 2019.
According to Director-Investment Banking, Mayberry Investments Limited, Tania Waldron-Gooden, the speculation is that this could be due in part to public sector workers and others being paid their monthly salaries, last week.
Waldron-Gooden told the Jamaica Observer that even at this late moment she is not too concerned about reports of lower than expected participation from public sector workers as many of the applications are still being processed and it is only the completion of that process that can shed light on the actual numbers.
“I can't speak to the numbers, right now,” she said.
“What I can say is that our speculation is this. If there is a low turnout, we believe we will see an uptick given that payday has come and the offer is still open.
Until the JCSD (Jamaica Central Securities Depository) verifies all the applications we can't say what those numbers are at this time.”
She explained that there can be discrepancies such as the possibility of some government workers not ticking the “reserved” box for public sector employees in the application forms while others who who do not work for government may have ticked it instead.
These discrepancies are only clarified through the JCSD's verification process. The JCSD is a subsidiary of the Jamaica Stock Exchange and they process applications related to equity deals and any security to be listed on the stock exchange.
They were hired by PCJ as the central collecting agents for the Wigton Windfarm IPO and process the applications collected by the broker, Mayberry Investments, and the other selling agents.
Waldron-Gooden went on to reveal that “the small applicants are way more in this IPO than we have ever seen in other IPOs”.
She explained that this was a culmination of the marketing efforts that were made not just to reach the large investors with more sophisticated knowledge of the market but the smaller applicants as well.
Meetings were also held with several public sector groups.
“I did a presentation at the Jamaica Defence Force and we saw a lot of the soldiers' interest uptick,” she revealed. “We did a lot of presentations across several public sector groups and you saw the interest among people who know the stock market exists but don't really know how to invest or how to get an account open.
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People tend to shy away from what they don't understand.”
The basis of allotment in the Wigton Windfarm IPO is somewhat different from previous IPOs in that it is a bottom-up application, meaning all small applicants will be satisfied first.
It is a 100 per cent divestment by the government which is offering all the shares to the Jamaican people and will retain no financial interest once the IPO is complete.
Waldron-Gooden believes this particular IPO has done a lot to bring people on board to participate in the stock market and this is being seen at Mayberry Investments.
“People who wouldn't normally open an account here, because our minimum is a million, we have waived that minimum so anybody can come now and open an account at Mayberry,” she said.
HOW TO TAKE PART
She explained that in order to participate in the Wigton Windfarm IPO, an individual must have an existing account or open an account with a broker, whether at Mayberry Investments Limited or any other selling agents.
The 12 selling agents include Scotia Investments Jamaica Ltd, NCB Capital Markets Ltd, Stocks and Securities Ltd (SSL), GK Capital Management Ltd, JMMB Securities Ltd, Proven Wealth Ltd, Sagicor Investments Jamaica Ltd, Credit Union Fund Management Company, M/VL Stockbrokers Ltd, JN Fund Managers Ltd, Victoria Mutual Wealth Management Ltd and Barita Investments Ltd.
Opening the account is similar to opening a regular bank account, and while each broker or selling agent may have different documentation requirements they all generally require identification documents (ID) such as current driver's licence, national identification and passport.
Tax registration number, social security number or national identification number and proof of address (utility bill, bank statement, letter from a Justice of the Peace, etc) are other requirements.
Names and contact numbers of two references, birth certificate or passport and TRN for minors, proof of source of income (payslip or letter from an employer, etc) and proof of source of initial deposit are also necessary.
Once an account is opened by an individual, he or she may apply for shares by completing an application form found at the back of the prospectus.
The prospectus may be accessed from the Jamaica Stock Exchange's website or any of the listed brokers for this IPO. The application form can then be submitted along with the required funds.
Prospective applicants should consult with their broker on the accepted methods of payment.
Waldron-Gooden revealed that Mayberry Investments, through their marketing initiatives, also sought to inform potential small applicants on what happens after the application process has been completed.
Once an account is opened, the client receives a JCSD number which is a unique identifier to show that an individual owns a specific amount of the stock.
The stock cannot be bought or traded without that JCSD number.
After a basis of allotment is submitted by the lead broker, Mayberry Investments, to the JCSD and the Jamaica Stock Exchange, it will be made public after being accepted to let people know how many shares they might get based on certain calculations.
The brokers then apply for listing on the exchange.
Once listing is approved, trading is started and the stocks can be bought and sold on the exchange through a broker. Clients can communicate with their broker via e-mail or any other acceptable mode of communication to instruct them on how many units of the shares to sell or buy.
Waldron-Gooden says potential small investors were enlightened about the benefits of trading through the stock exchange.
“It creates a certain amount of liquidity,” she explains about the trading process.
“If you had bought into Wigton as a private company, you would have to go search for a buyer yourself, but in this case it makes it more liquid.
We use the term liquid meaning easier to convert to cash. The process is easier than if it were a private company.”
She expressed enthusiasm that small applicants who are coming into the stock market for the first time through the Wigton Windfarm IPO will be able to enjoy that advantage.
“People will get that opportunity,” she enthused.
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“And I feel good about that.”
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