Jollibee lists preferred shares, both rise in debut

Jollibee [JFC 229.80 6.39%] lists preferred shares, both rise in debut... JFC rang the bell to start the trading day at the PSE yesterday morning, to commemorate the listing of Series A [JFCPA 1010.00 1.00%] and Series B [JFCPB 1033.00 3.30%], the two new exchange-traded tranches of JFC’s shelf-registered preferred share offering.

While both tranches were priced at P1000/share, the rights and entitlements particular to each appear to have generated more public interest in Series B, considering that over P30 million in JFCPB shares changed hands and that drove the price up over 3% on the first day of trading.

Series A shares did P6 million in value traded and rose 1%.

As I wrote about last week, JFC used the proceeds raised through the sale of Series A and Series B preferred shares to pay off a chunk of a similar tranche of higher-interest preferred shares that were listed on the Singapore Exchange, which JFC sold last year to help finance the Coffee Bean & Tea Leaf acquisition.

MB BOTTOM-LINE

While there were more shares of Series B sold during the offer period, it looks like investors were simply drawn to that tranche’s higher dividend rate of 4.2405% per year and longer pre-step up period (5 years), as compared to Series A’s lower annual dividend at 3.2821% and shorter step-up (3 years). Just remember that the dividend rates are based on the offer price; as the market price of each stock goes up, the relative yield of the dividend will drop, and since the market price can change at any time, the resulting yield for new purchasers will vary.

The Series B shares appear to have caught the eye of the fabled “retail” crowd; the Series B offering was 3.11 times oversubscribed, and JFC’s President and CEO attributed that directly to us local small investors: “Thank you especially to the retail investors who accounted for the vast majority of the investment in our preferred shares.”

Once upon a time, preferred shares were the playground of the rich, with personal brokers and access to sophisticated investing advice. The exchange-listed preferred shares were never hidden from retail inventors, but their benefits were not considered to be something that we’d be interested in. Now, though, income-curious retail investors are taking a closer look at dividend-generating common stocks, preferred stocks, and REITs.

The market is starting to wake up to the presence of this whole new class of fixed-income investors, and I think it’s great. Fixed-income investments might not fit into every trader’s strategy, but they are certainly not just for the rich and connected anymore.

The retail investors who are out in the market buying these stocks already knew that, but listings like this one for JFC are helping the rich, the market, and its companies to realize that for themselves. 

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