Illiquidity in the Bahamian capital markets may have struck again — this time claiming around 20 percent of the Commonwealth Brewery (CBB) initial public offering (IPO).
Subscriptions came in at around $50 million or 80 percent of the $62.5 million worth of shares offered, according to Michael Anderson, president of the IPO’s placement agent and financial advisor Royal Fidelity. The IPO goes down as the largest to date in the country’s capital market, and had an estimated 3000 shareholders subscribe, but Anderson says that institutional investors may have proven ‘gun-shy’ from previous illiquidity experiences with Bahamian equities.
The level of participation from individual investors was strong, according to the Royal Fidelity chief, who estimated an average of 150 shareholders per day subscribed for shares during the offer period. Anderson said that in many cases individuals applied for large amounts of shares, and that as he anticipated from the outset, they participated in the IPO on a greater scale than they have previously.
Liquidity concerns have proven a persistent issue for BISX-listed equities, with specialists calling for measures including a revision of the pricing mechanism the exchange uses, a larger number of shares available for trading and even a smaller number of ‘unsophisticated’ investors being allowed to participate in the market. Illiquidity has also been blamed for artificially low equity prices in some instances, with single trades wiping millions of dollars away from institutional balance sheets.
