Last update: 06-Dec-2013 8:12 am
Friday, December 06, 2013
Trinidad & Tobago Guardian Online
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Govt to earn $1 billion from share sale as First Citizens IPO oversubscribed
The initial public offering (IPO) of 48,495,665 shares by the Government in state-owned bank, First Citizens has been oversubscribed by a significant amount, sources at the bank disclosed yesterday. But the officials declined to say the extent to which demand for the shares outstripped the supply, citing the fact that the final tally has not yet been completed. The investing public is anxiously awaiting the results of the First Citizens IPO as it is the first offering of its kind in more than a decade and thousands of new individual investors are reported to have opened investment accounts in order to buy the shares of the banking group.
Of the 48,495,665 being offered, it is expected that 60 per cent will be taken up by local financial institutions such as pension plans, credit unions, mutual funds and the National Insurance Board. Employees of the bank—who can purchase up to 5,000 shares each at a ten per cent discount to the $22 offer price—have been allocated 15 per cent of the shares on offer, some 7,274,349 shares. Individual investors have also been allocated 15 per cent of the shares on offer, while companies registered in T&T and other investors such as the Commonwealth Development Corporation and the Caribbean Investment Fund have been allocated ten per cent of the shares on offer.
First Citizens is a majority owned (96.5 per cent) subsidiary of First Citizens Holdings Ltd (FCHL), which is a company that is wholly owned by the Corporation Sole. The other original shareholders of the banking group are the National Insurance Board, which owns 1.1 per cent, and a Central Bank holding company, which owns 2.4 per cent. After the IPO, FCHL will own 77.2 per cent of First Citizens and the investors who purchased shares in the IPO will own 19.3 per cent of the company. According to the prospectus, the net proceeds of the IPO will be about $1.05 billion after the deduction of transaction expenses, which are expected to be about $13.6 million, but before employee discounts.
Government will collect the proceeds of the IPO, which are expected to boost the revenues collected by the State during the 2013 fiscal year, which is expected to please Finance Minister Larry Howai, who served as the chief executive of the bank for years. First Citizens has stated in the prospectus that it will target an annual dividend payout percentage of between 45 and 55 per cent of its net profit after tax. The company projects that it could earn $588.5 million in after-tax profits for the 12-month period ending September 2013. If it does, it would distribute between $264.8 million and $323.6 million to its shareholders.
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