FAILURE OF THE FCB APO

Kevin Ramnarine.

The Minister of Finance must accept responsibility for the failure of the FCB Additional Public Offering (APO). In total approximately 48.5 million shares were offered at TT$ 32 per share and approximately 32 million were sold. This means 34% or approximately 16.5 million shares were not sold and the APO was under subscribed.

This compares to the 2013 FCB IPO which was over subscribed by 3.12 times and the 2015 TTNGL IPO which was over subscribed by 1.77 times. The TTNGL IPO succeeded despite sliding oil and gas prices.

The failure of the FCB APO, is in no way a reflection on First Citizens Bank (FCB), its staff and the robustness of that institution. It is a reflection on the poor management of the APO from the Ministry of Finance.

It was clear from the start that the price of TT$ 32 was too high. The fact that the FCB stock trades at or around that price on the stock exchange meant there was little or no incentive for the investor.

The under subscription happened even though the Ministry of Finance extended the deadline from March 24th, 2017 to April 7th, 2017. This, the Ministry said, was done “as a result of a significant level of enquiries and interest from public officers who will receive their back-pay within the next week”. It is now obvious that this was not the real reason for that extension.

The under subscription also says that investors believe that if they bought these shares they would not appreciate in the short to medium term. The failure of the APO also comes against the backdrop of excess liquidity in the financial system. That is to say, people opted to keep their money in banks rather than invest in the APO.
Both these points demonstrate a loss of confidence by citizens and investors in the economy.

Kevin Ramnarine, Former Minister of Energy