Alliance Financial suspends $2 billion IPO - Regulators probe matter concerning related company
Published:Wednesday | December 30, 2020 | 12:08 AMSteven Jackson/Senior Business Reporter
Alliance Financial Services Limited has announced the suspension of its initial public offering, IPO, in order to allow regulators to assess a matter pertaining to a separate company held by its principals.
“The matter has nothing to do with Alliance Financial Services at all,” Peter Chin, Alliance Financial’s co-founder, president and CEO, told the Financial Gleaner on Monday.
“I cannot give further details because it is before the regulators. They have to do their process,” Chin said.
The prospectus for the IPO was published on December 21, 2020, subsequent to its successful registration with the Financial Services Commission, the company said.
“After publication, the directors of the selling shareholders were made aware of a matter relating to a separate entity in which they are connected parties. The selling shareholders have deemed it prudent to suspend the offer until January 28, 2021 and anticipate that the matter will be resolved shortly,” a statement from Alliance Financial said on Monday.
JMMB Securities is broker and arranger for the offer. The IPO’s initial opening date was December 28 with a closing date of January 11. The suspension, on the surface, could allow investors more time to apply for the offer following the conclusion of the matter.
When contacted for a comment on this possibility, a JMMB senior manager involved in the offer declined comment and directed the Financial Gleaner to Alliance Financial.
Alliance Financial, which acts as a primary agent for remittance provider MoneyGram, also offers cambio services, and provides payment services as a principal member of the MasterCard network. Its main regulator is the Bank of Jamaica. The company was founded 24 years ago by Robert and Peter Chin. The Chins also operate a separate company, Alliance Investment Management, that provides asset management services and is regulated by the Financial Services Commission.
The IPO would see the founders sell two billion dollars’ worth of their holdings to shareholders at $1.59, but maintain shares and management control.
“None of the net proceeds from the invitation will be payable to the company as all the shares that are the subject of the invitation are being sold by the selling shareholders,” the prospectus states.
A successful IPO would reduce the holdings by the Chins, who want to sell down their stake from 88 per cent to roughly 70 per cent. Upon the closing of the invitation, the company intends to list its shares on the main market of the Jamaica Stock Exchange. But there’s one caveat, the IPO needs to be largely fully subscribed or the deal will lapse.
“The selling shareholders expect to receive the amount of J$1.99 billion pursuant to this invitation. If, however, the invitation does not raise a minimum of $1.5 billion within 40 days after the publication of this prospectus, the application for listing will not be made and all payments for the shares received from applicants will be returned,” the prospectus adds.