By NEIL HARTNELL
Tribune Business Editor
BISX-listed FOCOL Holdings is on a capital markets “reconnaissance” mission to determine its best finance-raising options as it “very aggressively” seeks to position itself for growth post-COVID-19.
Sir Franklyn Wilson, the company’s chairman, told Tribune Business it was in the early stages of a scouting mission to gauge investor appetite, and the amount and type of capital it could raise, as it moves to “fulfill that vision” of being a major player in The Bahamas’ economic rebuilding after the pandemic.
Responding after this newspaper was informed that FOCOL Holdings was eyeing a $40m raise, Sir Franklyn said he could not confirm that number as no decision had yet been taken to tap the capital markets. However, he revealed that the petroleum products supplier may seek “more, less or none depending on how aggressive we become”.
And he disclosed that an equity raise, which would give existing or new investors an opportunity to own part of FOCOL Holdings, was among the options being considered. Sir Franklyn argued that this, rather than the debt financing issues that Bahamian companies typically use, was the only true way to forge “a real partnership” and give Bahamians greater ownership of their own economy.
“FOCOL has been reporting some very positive results, and our results to the end of April, which will be coming out soon, speak for themselves,” he told this newspaper. “We are very optimistic about the future of the country despite this temporary [COVID-19] setback we’re dealing with, and we’re being very aggressive in trying to ensure the company is properly positioned to assist in the future transformation of the nation.
“That will require us to have the capital to do some big things, and in that regard we’ve been doing some reconnaissance to see what’s happening in the capital markets...... I can confirm to you that we have been doing that to get a sense of what is happening in the capital markets despite COVID-19 and all the challenges facing the country.
“The context of doing that is we have a vision to be part of the redevelopment of the modern Bahamas. We’re in the mood. We’re talking to people we believe can tell us what’s really happening.” Sir Franklyn added that FOCOL Holdings was in the early stages of its exploration, but it had drawn significant encouragement from the recently-closed $130m bond offering by Nassau Cruise Port that was oversubscribed.
“We are absolutely delighted and pleased to learn of the success of the port’s offering, because that validates our hope and prayer that there is significant capital still in the system,” he said. “Their success despite COVID-19 is very significant, and notable and commendable.”
FOCOL Holdings, which acquired Shell’s wholesale and retail operations in 2006, appears well-positioned to exploit potential acquisition and growth opportunities in the pandemic’s aftermath. An “essential” service, which has continued operating throughout COVID-19, its balance sheet as at January 31, 2020, showed over $28.5m in cash and more than $190m in shareholder equity (the company’s net worth)/
Profits were also up by 41 percent or almost $5m to $16.274m at end-January 2020, but Sir Franklyn cautioned that FOCOL Holdings was only at the beginning. “Prudent judgment on timing is the end result of a process,” he added. “We are going through the process of strategic thinking, of exploring. We’re saying that if we decide to follow a particular path, and if the necessary quantum of money is that, how would we finance it?
“We just wanted to get a sense of what is the capacity of the market. Depending on how aggressive we become it may be more, it may be less, it may be none. What I am confirming is that we see FOCOL Holdings as an important part of the future well-being of the economy of the Commonwealth of The Bahamas, and we want to be certain we are positioning the company to fulfill that vision.”
Sir Franklyn told Tribune Business that FOCOL Holdings’ preferred financing method is “not necessarily debt”. He said: “The fact of the matter is it has been a little while since there’s been a substantial, significant offering of equity in our capital markets.
“Yes, while investors have shown their preference for debt issues, we are exploring the idea of trying to see if there are investors that may see the future differently. The fact of the matter is that one consequence of COVID-19 is it’s making more Bahamians aware that we must do more to own our own country, and to own our country we have to do more than debt financing.
“Our reconnaissance is not necessarily limited to debt. It’s a question of real partnership. Bahamian investors are not partners when they lend you money; they’re partners when they are equity investors. We’re exploring; it’s early days.”
Sir Franklyn recalled how FOCOL Holdings had played “a major role” in Hurricane Matthew’s aftermath when it prevented disruption to the nation’s fuel supplies that may have resulted from damage at Clifton Pier.
“FOCOL stepped up and prevented that from becoming a true national disaster,” he added, “and that inspired us to make sure we’re always positioned to pay a major role in national development in the country.”