Last update: 09-Dec-2013 6:43 pm
Monday, December 09, 2013
Trinidad & Tobago Guardian Online
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Is divestment key to PP victory in 2015?
The huge success of the First Citizens initial public offering (IPO) of shares should tell Prime Minister Kamla Persad-Bissessar and the Government that she leads all that they need to know about the virtues of divestment and its potential political benefits for the ruling party.
From where I sit, the First Citizens IPO should be the template on which future Government policy with regard to enriching and empowering T&T’s middle class should be built.
And, it seems to me, the reversal of the impoverishment, if not the enrichment, of T&T’s middle class—which, for the sake of this argument, is defined as any household with income of between $10,320 and $41,666—ought to have a positive political impact.
Just to recap the details of the IPO, Government offered for sale 48,495,665 shares in First Citizens to T&T individual and institutional investors as well as employees of the bank. For local individuals and institutions, the shares were priced at $22 each, while the bank’s employees were allowed to purchase up to 5,000 shares at a 10 per cent discount, at $19.80 per share.
It is my understanding that the IPO was approximately three-and-a-half times oversubscribed, which means the T&T public applied for shares worth about $3.5 billion, when the total value of the offer would have been just over $1 billion ($22 x 48,495,665 = $1.066 billion).
From a financial point of view, the First Citizens template has allowed the Government to do the following:
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