Analysis of JMMB Group Limited Additional Public Offering

JMMB Group Limited will be doing an additional public offering of 266,737,797 new ordinary shares to the public at a price of J$38.00-J$38.75 and TT$1.90 – TT$1.94 for investors residing in Jamaica and Trinidad & Tobago, respectively. The firm will be raising approximately J$10 billion to support the acquisition of approximately 22.2% of Alignvest Acquisition II Corporation, which entered into a definitive arrangement agreement to acquire all the shares of Sagicor Financial Corporation. Click the below link to read our recent analysis of the offer.

Recommendation

Price: 38.75
Estimated Fair Value: 63.47
Implied Price Upside: 63.78%
Recommendation: BUY

The expansionary monetary policy being executed by the Bank of Jamaica, characterized by low interest rates and high market liquidity coupled with the delevarging of the Government of Jamaica presents significant opportunities for increased revenue generating activity for financial services firms. We believe JMMB’s position in the various segments of the financial services sectors should allow them to benefit from a continuation of stability in the local economy. The current macroeconomic environment provides a reasonable foundation for the Group to continue its expansion drive.

Headwinds to JMMB’s success could be the increasing effect of competition as well as the Group’s high relative leverage position which may limit its ability to take advantage of growth opportunities. We however believe JMMBGL’s strong core business will be significantly bolstered by the expected accretion of the AlignVest acquisition. Consequently, we recommend JMMBGL’s stock as a BUY at the APO price of J$38.00-J$38.75 which based on our estimate of fair value of 6 expected upside of ~64% over a 18 month horizon. We however advise you to consult an investment advisor at Barita Investments Ltd to discuss your individual circumstances before making any investment decision.

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