Mayberry Jamaica Equities Limited, MJE, which holds minority positions in listed companies, has raised $2.2 billion in cash to make new investments in stocks.
MJE remains bullish on the local stock market, and expects its gains to outperform the cost of funds borrowed.
“MJE just raised $2.2 billion this week. We got it at 7.25 per cent for five years,” said CEO of Mayberry Investments Limited Gary Peart at the company’s monthly investor forum on Wednesday.
Mayberry Jamaica weighed the option of selling a portion of its existing portfolio of stocks to raise the funds, but opted against it, saying those stock values were still climbing. Borrowing cash at a single-digit rate was seen as a more prudent course.
“We have decided to borrow money to take advantage of additional opportunities that we see out there. The funds would allow the company to invest in opportunities which arise,” Peart said.
Borrowing rates have been trending down, tracking with the central bank’s cut in policy rates that were last maintained at two per cent in August. Another rate decision is to be announced on Tuesday by the Bank of Jamaica.
Peart said three years ago, Mayberry would not have thought it likely to borrow at such low rates. Mayberry Chairman Christopher Berry credited the improved macroeconomy and bipartisan fiscal discipline for the current conditions. Both men were speaking at the forum on opportunities in the equity market.
MJE’s portfolio of stocks mainly includes Lasco Financial Services Limited, Caribbean Producers Jamaica Limited, Supreme Ventures Limited, Caribbean Cement Company Limited, Jamaica Broilers Group Limited and JMMB Group Limited.
Peart did not disclose which stocks he would acquire with the new funds, but noted that his top equity picks rated as a ‘buy’ included Stationery & Office Supplies Limited, Supreme Ventures, Ironrock Insurance, Sagicor X Fund, JMMB Group, CAC 2000, NCB Financial Group, Lasco Distributors and MJE itself, which listed on the Jamaica Stock Exchange in July.
At last disclosure at September 24, MJE’s net asset value, or NAV, was $10.61 per share. Its NAV in June prior to listing was $9.48, representing a 12 per cent increase in value to date to around $12 billion.
The Mayberry team sees that figure ballooning even more.
Currently, some blue-chip customers of commercial banks are borrowing below 7.0 per cent for JMD loans and below 5.0 per cent on US dollar debt, but Peart believes that interest rates will not get much lower.
The private sector is not investing enough to take advantage of the low interest rates, he added, while calling for more entrepreneurial ventures or for investors to buy into businesses.
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