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FirstRock plans to raise up to US$18.5 million in IPO

Published:Sunday | December 22, 2019 | 12:00 AMSteven Jackson - Senior Business Writer
Ryan Reid

FirstRock Capital Holdings aims to raise roughly US$12.3 million in its in initial public offering (IPO) in January as part of plans to finance a series of real estate deals that includes acquiring the Shoppes at Rose Hall in St James.

The amount will grow to US$18.5 million if the offer is upsized.

The company already owns eight properties spread out across Jamaica, the United States and Costa Rica. It plans to acquire an additional three properties in the coming months at a total value of US$25 million through a combination of debt and equity. The properties include the Shoppes at Rose Hall, which spans a total of six acres with 29 shops, seven of which are unoccupied. FirstRock plans to acquire the property at US$13.25 million. It also plans to acquire a 3.4-acre property on Bamboo Avenue in St Andrew at a cost of US$5 million. The intention is to create luxury apartments at the location.

“Ground is to be broken in the second quarter of 2020,”stated the prospectus for the IPO.

The company also plans to acquire an office building in Virginia, United States, which contains the leased offices of SunTrust Bank, for US$7 million.

FirstRock management, led by CEO and co-founder Ryan Reid, plans to create a real estate investment trust offering a 10 per cent return on equity in its first year of listing on the Jamaica Stock Exchange and gradually increasing returns each year to 14 per cent by 2024.

The company made US$218,000 in net profit over six months of operations, with projections to grow that to US$2.8 million by December 2020.

In the event of a successful IPO, management plans to deploy two-thirds of the proceeds to focus on acquiring properties which are income producing through rentals. A further 23 per cent of the funds will go towards real estate assets. Then, a further 13 per cent would see acquisitions with the intention of flipping them for capital gains.

“The company expects to fund US$12.25 million over the next 12 months, using the proceeds of the IPO based on evaluation and assessment of potential investment opportunities,” stated management in the prospectus.

The IPO opens on January 13 and closes on Janaury 31, 2020. The company plans to raise the funds from the issue of 106 million shares in two classes at US$0.12. But it has the right to upsize the offer by an additional 53 million shares on oversubscription. Sagicor Investments will act as the arranger and lead broker to the deal. Sygnus Capital will act as the co-arranger.

The company forecasts that its total assets will move from US$65 million in 2020 to US$87 million in 2024. From an operational perspective it expects to grow total revenues from US$4 million in December 2020 to US$11 million by 2024. Profit is projected at US$$2.8 million in 2020 and will rise to US$8.8 million by 2024.

The company began operating in March 2019 upon completion of its private placement offer in which approximately US$16 million in capital was raised from institutional and accredited high net worth investors.

“As such, the financial results mainly reflect the activities of the company from March 15, 2019 through to September 30, 2019,” stated the prospectus.

steven.jackson@gleanerjm.com