HONEY Bun Limited, the fourth manufacturing company to seek listing on the Jamaica Stock Exchange (JSE) Junior Market will seek to raise between $50 million to $60 million from the initial public offer (IPO), which should be completed by the end of April this year.
This is according to Gary Peart, CEO, Mayberry Investment Limited, lead broker of the IPO. Yesterday, Peart told the Business Observer that the company will offer 20-23 per cent of its shares to the public.
Peart, whose company has listed seven of the eight companies so far on the JSE, many of them with historic results, has high hopes for the Honey Bun IPO.
“If we go by how successful the other listings have been, then we can expect that this one will be just as, if not more, successful,” Peart said.
Michelle Chong, CEO of the company which has been family-owned for 29 years, said the IPO would provide Honey Bun with the appropriate type and level of financing to pursue its expansion plans. Currently only one per cent of revenue is earned from exports and plans are to expand further into international markets including the United States, United Kingdom and across the Caribbean.
The company is also in the last stages of gaining its HACCP certification, a system of safety in food production and pharmaceuticals used by the United States Food and Drug Administration to ensure safe procedures and products.
This level of certification is critical for the company Chong said benchmarks its operations against international standards.
“It is very important that manufacturing companies benchmark their operations to international standards. A lot of times we don’t do that as manufacturers,” said Chong. “We tend to find the cheapest way or look and see what somebody else is doing across the road and we do what they are doing and we get satisfied when we get a little more robust,” she said.
Honey Bun is also targeting a greater share of the local market. It now controls up to 38 per cent of the market for individual packaged baked products, and is the number one among the youth market for persons up to 40 years old. However, Krystal Chong, director of marketing and business development for Honey Bun, said the company will be launching two new products this year for the over-40 market segment.
The Honey Bun CEO stressed the importance of the IPO to the growth of the company and the growth in manufacturing in Jamaica.
“We recognise the importance of manufacturing because without manufacturing we don’t have much growth,” said Michelle Chong. She said she met with the Jamaica Productivity Centre to discuss improving the productivity of the company overall, taking into consideration the claims that the manufacturing sector has been performing less productively even with lower cost of financing.
“We have to recognise that when we don’t manufacture, the company has to import,” said Chong. “This is another side that we don’t want to go down, so its important that we keep a very vibrant manufacturing industry,” she added.
Chong said she chose to go the route of the IPO to take advantage of the opportunities that are available for companies such as Honey Bun.
“You just have to always be in touch with what is available to help you to perform well as a manufacturing company,” she said. “I like the structure of a public instead of a private company. It keeps you accountable.” She said the management would also benefit from the oversight of an independent Board of Directors and the 10-year tax incentive that the Junior Market allows, five of which are free of tax on corporate profits.
Honey Bun Limited has grown from a handful of workers to over 250 employees. The company operates 24 hours a day, seven days a week in order to output and distribute freshly baked products daily. The Honey Bun brand is available locally in all leading supermarkets, small retails, schools and service stations. The main product lines manufactured under the Honey Bun brand are doughnuts, snack cakes, buns, raisin bread, and of course, cheese bread.
Peart believes investors will like the offer for a share of Honey Bun. “We try to put together the solutions that investors want and I believe that this issue will be designed to attract investment once the prospectus is finalised,” said Peart.