Dennise Williams, Staff Reporter
Ryland Campbell, chairman and group president and chief executive officer of the Capital & Credit Financial Group. - FILE
THERE IS almost a sense of déjà vu about the timing of the Capital & Credit Merchant Bank (CCMB) rights issue.
The stock market is down and investor sentiment is low. The economic prospects are uncertain, inflation is on the upswing and the exchange rate is under pressure.
These are the conditions now and were the same conditions that prevailed when CCMB launched their initial public offer in 2003.
However, if the relaxed, confident manner of the company's executives is anything to go by, it appears that things will be just as good the second time around for the Capital & Credit Group. It helps to bolster one's confidence knowing that your stock price appreciated 400 per cent from its IPO price, and has only retreated with the general stock market malaise.
A share price of $20.50 that came out two years earlier at $5 is not an achievement to dismiss.
FEELS COMFORTABLE
At a press luncheon held at the Pegasus Hotel on Wednesday, Ryland Campbell, chairman and group president and chief executive officer of the Capital & Credit Financial Group, said, "I feel as comfortable as when we went to market in 2003."
He said they were fully aware of the challenges, "but we have a good product that has demonstrated its worth over the last 11 years. And it is not a lot of shares we are offering - only 58 million." The aim is to raise over $1 billion.
And as to the timing of the rights issue, "There is no time that could be a right time if you look only at the negative."
In 2003 when the shares were brought to the market, money market interest rates moved 18.5 per cent to 34 per cent to slow down the devaluation of the local currency.
"Those who bought the money market instrument at 34 per cent are very happy. But others made over 300 per cent when they bought and sold their CCMB shares," he said. "They are also very happy."
INVESTORS
The market requires investors to balance their portfolio.
Given the circumstances, CCMB will be focusing on the institutional and high net worth individuals. Devon Barrett, executive vice-president and general manager, Capital & Credit Merchant Bank, said some institutional investors backed out of the 2003 IPO when the 34 per cent money market instrument was offered. "Now they are back looking for the volume of CCMB shares to balance out their portfolios."
Because the institutions can't go to the stock market and buy a large block of shares, the rights issue is attractive alternative for them, he said.
"Our record speaks for itself," Mr. Campbell said. "We have fixity of purpose and we won't let any hurdles stop us. That is what we have learned over the last 11 years. And I would say to investors, buy an opportunity, not just a share."
