By Orville Williams
CEO of the West Indies Oil Company (WIOC), Gregory Georges, believes more local companies should consider ‘opening themselves up’ to investment from the public, as a means of acquiring capital and boosting the economy.
WIOC itself closed out an Initial Public Offering (IPO) back in May, acquiring more than 1,000 new shareholders, according to Georges, and strengthening its connection with the local community.
That IPO, which opened in late March, came about after the Antigua and Barbuda government decided to divest 10 percent of its share in the company.
Now, the financial impact of the Covid-19 pandemic has stunted the growth of many local companies, while others have been affected even worse; forced to shutter their operations.
Even some that have navigated the pandemic better than others have postponed plans for large-scale development, due to the continued uncertainty.
It is for these reasons and others unrelated to the pandemic that Georges says more consideration should be given to going public.
“It certainly opens up the doors to fundraising…the cash influx from an IPO is clear justification to go public, even [before] considering the other benefits, especially as it opens up additional investment opportunities because of that new cash inflow.
“New cash can always be used to finance capital expenditure to acquire new technologies to make your business more efficient and, therefore, more competitive. It [can also be used to] reduce your debt and to diversify your business.
“The fact is, any cash influx into a business can certainly transform the growth trajectory of a business.”
The WIOC IPO certainly drew interest from other companies which are actively looking to improve their operations via capital injection, with Georges disclosing that he has even been contacted by executives seeking advice on going public.
He maintains though, that there are several other benefits to be gained in addition to acquiring capital, despite it often being the primary motivator.
“It’s also an opportunity for small investors to get in, they can play a role in the development of the economy. It’s an avenue for returns outside of the traditional returns from the financial institutions and just investing locally alone, the funds remain in circulation locally, you can imagine the effect on local business.
“Local business’ profits are invested locally; local investors now have opportunities to earn dividends. You’re using indigenous banks, [which] are then lending locally, reinvesting in the community.
“There are so many benefits of going public, even the reduction in the overall cost of capital. You find that a major obstacle for any company really, is the cost of capital.
“You can find that companies have to pay the banks higher interest rates to receive loans from them and what an IPO can do is certainly lessen that difficulty of being able to receive additional capital,” he explained.
According to Georges, WIOC’s IPO brought significant attention and credibility to the enterprise, along with the financial gains, but he is also proud of the fact it has given hundreds of Antiguans and Barbudans – both residents and those within the diaspora – a greater feeling of ownership in their homeland.
He advised those who were not lucky enough to take part in the IPO, that there is a second opportunity forthcoming.
“We’ve seen quite a bit of interest in purchasing shares even after the closing of the offer. What I would say to those individuals who missed out is that we do plan to be directly listed on the Eastern Caribbean Securities Exchange (ECSE),” he said.
“Once we do that, it will certainly provide a platform for those who missed out on the initial IPO to become a WIOC shareholder.”
Speaking further on the viability of the ECSE, Georges says he is delighted with the interest and plans that have been suggested for some local companies.
“When you think about it, on the ECSE, I believe we have only 13 companies listed. That’s quite small for a region that generates a fair amount of economic activity.
“I know that our honourable Prime Minister has spoken about other local entities going public…[like] APUA INET and State Insurance. I think that’s an excellent move.”
Along with the two entities mentioned by Georges, Prime Minister Gaston Browne has also indicated that the government intends to divest some of its interests in the Eastern Caribbean Amalgamated Bank (ECAB) – which has recently acquired Scotiabank’s operations in Antigua – within the local population. There are also plans to list ECAB on the ECSE.