First social IPO coming

The Private Sector Organisation of Jamaica, PSOJ, plans to list its charity Project STAR on the Jamaica Social Stock Exchange via an initial public offering set to raise $100 million.

The social shares will be offered at $1 before month-end. The prospectus will become available this week.

The Project STAR shares will represent charity donations rather than tradeable shares. So, investors in the security won’t be able to sell to one another on the exchange.

“It is an ambitious project and an ambitious funding target. The mechanism is in itself unique,” said chairman of the Jamaica Stock Exchange, Julian Mair.

“The $100 million is a lot of money. But I am confident we are going to get there. Most of the broker-dealers have made themselves available and feel comfortable selling to their clients,” he said.

Mair is the co-sponsor and public funding lead for the Project STAR IPO.

However, unlike a traditional IPO, there is no lead broker or arranger. Rather, the project has received the support of the Jamaica Securities Dealers Association, and, as such, many of their members, including dealers of securities on the JSE ,will all act as co-brokers, Mair said in an interview with the Financial Gleaner.

DONATIONS

The project is already uploaded on the Jamaica Social Stock Exchange’s page, revealing a $250-million budget target. Donations, however, are not yet open.

The $100 million IPO proceeds is part of the $250-million budget for year one of the charity’s operation. The other $150 million in year will come in the form of donations from large corporates or wealthy individuals, Mair said.

In later years, multilateral donors and Jamaicans resident overseas will be encouraged to participate in future funding. Over five years, the project plans to raise $2 billion in total, according to previous reports.

“We do not want to think of it as a donation to charity, but as an investment in human capital,” Mair said, “We want people to take their corporate social responsibility to a higher level. We want them to feel and know that they are investing in a better outcome for Jamaica.”

Since the onset of the pandemic, there has been a noticeable increase in apathy, social decay, reduced school enrolment, increased gang enrolment, and higher levels of crime. Project STAR emerged from that realisation with a charge to curb the negative trajectory, using science and the best leaders in the field.

“We want all of Jamaica to understand that we can turn the tide,” Mair said, “It is important to support this initiative to make a dent in the hopelessness that would have increased during COVID-19,” he added.

Project STAR, which stands for social transformation and renewal, was created by the PSOJ in partnership with the Jamaica Constabulary Force. Its targeted interventions are focussed on the under-resourced areas of Jamaica.

Project STAR is managed by Saffrey Brown, a former general manager of the Jamaica National Foundation and outgoing chair of the Council for Voluntary Social Services. Its operation began in September 2022 with plans to intervene in scores of under-invested communities, including those in East Kingston, May Pen and Savanna-la-Mar.

“We think it can be transformative,” said Mair.

The success of the project depends less on the raw financials and more on the social performance indicators.

The project already discloses its social performance on a quarterly basis. But the pending prospectus will state the key performance indicators by which investors can judge the success of the project. It will also disclose the ambitions, scope of the project, and the communities set for intervention.

“It is not about financial performance,” said Mair,“The performance we are targeting is how it impacts the lives of the communities in which we have entered and the people within.”

The Jamaica Social Stock Exchange is only a few years old.

It’s being built out in two phases: the first involves the Jamaica Social Impact Market, which allows donations in charity projects; while the second relates to the Jamaica Impact Investment Market, which will allows for investment in entities that offer tradeable shares on the social market. The second phase requires legislation.

Various projects and ventures inclusive of Alpha School of Music project, and Deaf Can! Coffee, have raised funds since the launch of the social exchange in 2019.

However, JSE Group Managing Director Marlene Street Forrest affirmed on Thursday that the PSOJ initiative sets new ground as the first social listing to issue social stocks to social investors, who will receive a ‘social stock statement’.

“The Listing of STAR is significant because of the magnitude of the projects, its reach and its impact,” said Street Forrest.

“The unique proposition also is that of the initial public offering type of programme to garner funding in part for this massive exercise that could positively impact the social ecosystem,” she said.

steven.jackson@gleanerjm.com