New IPO: Key Insurance Makes Last Minute Dash For The Junior Market

Talk about a reaaally expedited listing. Key Insurance Company Limited will have to rush its application if it intends to list on the Jamaica Stock Exchange Junior Market, BEFORE the end of March 31, 2016. The company, which published its prospectus yesterday (Tuesday March 22nd) will open its IPO, one week later on the Tuesday the 29th and hopes to list its shares on the JSE before the 31st (Thusday). Wow, talk about a close call.

Key insurance is offering 92.1m shares (52.7m new and 39.4m from existing shareholders who have decided to sell) to the general public in this IPO. JMMB securities has been selected as their lead broker and has access to 80% of the total shares on offer as reserved shares.

The Listing

KEY-insurance-logoKey Insurance Company Ltd intends to raise $119.0m by selling the 52.7m new shares at $2.27 per share. Total amount to be raised is $209.1m which includes $89.5m for existing shareholders. The company also has the option to increase the offer to raise as much as $250.9m. If the company is not successful in listing on the Junior market, to receive the benefit of the concessionary tax regime, it will refund all applicants.

The Company

A few points about Key Insurance Company Ltd

  • A registered general insurer (the 2nd to come to the market in less than a month, with Ironrock insurance listing only a few days ago.)
  • Began operations in Feb 1983 with one location in Cross Roads (and head office in New Kingston). Now has 6 locations across the island.
  • The company offers – Motor vehicle, property, commercial, contractors, liability, travel and personal accident insurance,
  • Intends to use the money to fund its expansion
  • The company grew its total assets by $70.7m over 5 years from $1.88b in 2011 to $1.95b in 2015
  • The company managed to report net profit of $23.1m in 2015, a reduction of $2.0m from the $25.1m reported in 2014 but an increase from its loss making position in prior years ($15.6m loss in 2013 and $8.6m loss in 2011).
  • The company has reported negative operating cash flows for every year since 2011 and seems to be supported by its significant returns from dividends and interest received ($58.5m in 2015)
  • The company has a large asset base of investment properties ($173.1m as at 2015).

The IPO values the company at $836.5 million. Startup insurance company IronRock was valued at $642m at its listing (now $851.7m based on the market price of $3.98). The other longstanding insurance company General accident is valued at $3.1b by market capitalization.

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