8 months ago
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RA Williams Distributors Limited, which sells medicines, plans to raise $400 million this month through an initial public offering of shares on the junior market of the Jamaica Stock Exchange, JSE, priced at $1 per share.
The Spanish Town, St Catherine-based company serves 700 customers with a staff of 70. The raised funds will enhance business operations and reduce debt. The IPO opens on July 17 and closes on July 31, 2024, with Sagicor Investments Jamaica Limited acting as the lead broker.
“This debt reduction will have the immediate effect of reducing the company’s financing costs, thereby increasing the company’s profitability and the expected returns to shareholders,” said co-founder and CEO Audley Reid in the IPO prospectus.
At the end of April 2024, the company held $155 million in debt, which is equivalent to 40 per cent of its capital. Reid, who co-founded the company, was inspired and mentored by the late business leader R. Danvers ‘Danny’ Williams, who joined the board in 2015. Reid co-founded the company along with Chief Operating Officer Jewel Reid.
“Our journey and the story behind it is not unique, but it is the epitome of what it means to truly be Jamaican. Ambitious, resilient, bold and indomitable are a few of the words that come to mind when describing our company’s story,” said CEO Reid. “Though we have come a long way, we are even more inspired by what lies ahead,” he said.
RA Williams distributes 130 products, and plans to add new drugs to its portfolio next year. The company has filed several drug registration applications with the Ministry of Health and Wellness, including treatments for eye and cardiovascular conditions, diabetes and hypertension.
The IPO will increase the company’s issued share capital from 1.6 billion to 2.0 billion units, diluting the holdings of the three main shareholders. A fully subscribed offer would reduce the holdings of Ranwill International, a company held by the Reid co-founders and Evelyn Williams, from 49.4 per cent to 39.5 per cent. It would also reduce the holdings of Chairman John Bailey from 24.7 per cent to 19.75 per cent, and Ravers Limited, which is part of the estate of R. ‘Danny’ Williams, from 24.7 per cent to 19.75 per cent.
Of the 400 million units on offer, equating to 20 per cent of the company, the general public can purchase 10 per cent, an additional eight per cent is allocated to key partners, while the remainder is earmarked for staff. The allocation meets JSE rules, which require a company to sell no less than 20 per cent of the shareholdings in an IPO in order to qualify for listing.
A fully subscribed offer would give the company a $2-billion market valuation, or five times its current net worth of $385 million.
RA Williams is coming to market with a PE, or price-to-earnings, ratio of about 20 times, based on its April 2024 year-end profit. That’s above other listed rivals – Indies Pharma Jamaica at 14 times earnings; and Medical Disposables and Supplies, which has a negative PE of 9.3 times due to recent losses.
For its financial year ending April 2024, RA Williams reported annual revenue of $1.5 billion, up seven per cent relative to FY2023. The company expects to retain $85 million as profit, down from $98.5 million the previous year. Cash generation from operations rose significantly to $180 million, from $34 million in the prior year.
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