Derrimon IPO priced at $2.05
Published:Friday | November 29, 2013 | 12:00 AM
Marcella Scarlett, Business Reporter
Derrimon Trading Company Limited will offer 73,336,007 of its ordinary shares on the market next week, each priced at $2.05.
The J$150.34 million that the company aims to raise from the offer, will be used to expand its Sampars Cash & Carry business, retire a portion of the company's debt, and finance its working capital.
The company said it will be looking to establish other wholesale and retail outlets across the island.
Derrimon's share float is scheduled for December 2-9. The company aims to list on the junior exchange by the end of December, to qualify for the full 10-year tax holiday now allowed to junior listings.
A new tax waiver regime for new listings on the junior market expected to take effect next year will narrow the tax-relief period to five years and eventually eliminate them.
Some 8.57 million Derrimon shares will be offered to the public for subscription. A block of or 25.69 million will be issued to directors to whom the company is indebted. Those shares represent the conversion of loans owed to directors to equity.
Another block of 22 million shares has been reserved for clients of Mayberry Investment Limited, the arranger and broker of the offer.
Derrimon Trading was founded in 1998 by Derrick and Monique Cotterell, who together own 75 per cent of the company. Their stake will be diluted to 54.9 per cent after the IPO.
The company started as a distributor of commodities in Kingston. It saw significant growth in 2002 when it partnered with Nestle Jamaica Limited as regional co-distributor serving the parishes of St Catherine, St Thomas, Kingston and St Andrew.
In 2009, Derrimon acquired food supplier Sampars Cash & Carry Limited. Sampars was used by the company to increase its portfolio of products and extend its market reach.
More recently, the company has introduced its own brand - Delect - whose range of foods includes rice, canned mackerel, tomato ketchup, vegetable oil, and cornmeal.
Derrimon also offers warehouse space for rent at 235 Marcus Garvey Drive, an area of the business that the company says it plans to grow. This location provides Derrimon with 100,000 square feet of warehouse facilities, including cold storage, on a 3.5-acre property.
Derrimon's sales rose to $4.46 billion in 2012, from which it squeezed its highest gross profit margin in five years, 8.65 per cent.
Pre-tax profits amounted to $25 million.
Sales were up 42 per cent relative to 2011. The company attributes its sales performance to the development of additional revenue streams through expansion of its retail business, diversification of its product range and addition of Sampars outlets.