Atlantic Hardware and Plumbing Company on Marcus Garvey Drive in Kingston .
Atlantic Hardware launches $500-m IPO
Aims to be first listing on JSE in 2025
ATLANTIC Hardware and Plumbing Company Limited, a wholesale distributor of construction and home improvement supplies, has announced plans to raise $500 million in the first initial public offering (IPO) on the Jamaica Stock Exchange (JSE) this year. The company, which aims to list on the Junior Market of the JSE, is projecting double-digit revenue growth as it seeks to expand its operations. The IPO values the company at $1.95 billion.
The offer which opens February 27 and is scheduled to close March 13 — subject to early closure if oversubscribed — makes available just over 499 million ordinary shares at $1.00 each, with a minimum subscription of 1,000 shares. Of the total shares on offer, 399,999,800 are reserved for the lead broker, JMMB Securities Limited, key stakeholders and employees, while 100 million shares are available to the general public.
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Net proceeds, approximately $469.99 million after expenses, will be used primarily to repay existing debt, including a $300-million, fixed-rate bond due in March 2025, while another $56.6 million is set for partial repayments on three other loans totalling $285 million each.
“Our goal is to build on our strong foundation as a trusted supplier in the hardware industry while increasing operational efficiencies and diversifying our product offerings,” said Deanall Barnes, president and CEO of Atlantic Hardware and Plumbing, outlining the reason for the IPO in an interview Friday with the Jamaica Observer.
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Barnes, as part of Construct Group Limited whose other principal is businessman PB Scott, along with the Jeffrey Hall-led Lumber Depot and General Accident, acquired the 30-year-old Atlantic in March last year, and set about reorganising the entity for growth, with an eye toward listing on the Jamaica Stock Exchange.
Currently, Construct Group owns 50 per cent of Atlantic, with Lumber Depot owning 35 per cent and General Accident the other 15 per cent.
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Post-IPO, Construct Group Limited will remain Atlantic’s largest shareholder with a 39.8 per cent stake, followed by Lumber Depot Limited (27.9 per cent) and General Accident Insurance Company (11.9 per cent). The general public will hold 4.1 per cent of the company’s shares.
“We procured the business and did our analysis in terms of the operation, in terms of the enterprise establishment system that was in place, in terms of location,” Barnes said. “Immediately we did a stock count, clearly for valuation purposes, but also to ensure that we ordered better going forward.”
One major inefficiency identified and addressed was the company’s fragmented operations across three locations, with goods stored in 71 containers. “When we examined that, we decided that we were going to change location,” Barnes explained. “We moved to our present home at 105-107 Marcus Garvey Drive — right next to the Port of Kingston. We needed a bigger location to treat with our existing operation issues but also to build out.”
The new facility, leased from Eppley Caribbean Property Fund Limited SCC for five years with an option to renew for another five, has already begun delivering cost savings with projections that between $15 million and $18 million will be saved this year, Barnes said. The consolidation into a single location has also improved order fulfilment times and customer service. “Now we are all under one roof,” Barnes noted. “So in terms of just turnaround of customer orders, we have seen improvements since we have moved on November 1 last year. We have also seen just general improvement in the turnaround time in terms of delivery to customers, because we are operating more efficiently.”
The company’s strategic relocation on the port has not only addressed operational inefficiencies but also positioned Atlantic for future growth with its warehouse capacity of 47,000 square feet.
“We have established our projects division to deal primarily with our contractors and our developers, and these are the major contractors. For obvious reasons, we do not intend to interface with the smaller contractors, not because we don’t want their business but we sell all the hardware stores and we don’t believe that we should compete with any of our customers,” he added.
Barnes said that newly created projects division will be targetting hotels under construction and major government entities for business, including police stations which are earmarked for retrofitting, and National Housing Trust projects, among other to boost sales. He said he has also formed partnerships of convenience with other national distributors, to tap their supplies in a quid pro quo, to get around logistics issues which may impact supplies coming into the island.
The company now distributes over 2,400 products and serves more than 1,000 repeat customers across Jamaica, including hardware stores, contractors, and developers. Its prospectus, points out that it has strong relationships with global suppliers such as Stanley Tools and Black & Decker. It is however looking to broaden that product portfolio.
“We are looking at some products that we will be adding to our line. For obvious reasons we are not able to say [what products now] but we will be expanding our product range. And the items that will be added, we anticipate that they not only will match what we presently do, but it will provide some economic opportunities for the company.”
Atlantic Hardware and Plumbing reported revenues of $1.4 billion. It was a 15 per cent dip from the year before due mainly to the management diverting attention from sales activities to the transition of ownership of the business in 2023. Net profit of $105 million was realised in its financial year which ended December 2023.
For 2025, Barnes said the focus is on leveraging the operational efficiencies to grow, despite the construction sector showing signs of weakness, contracting by an estimated 2.8 per cent last year, according to the Planning Institute of Jamaica.
“What we will say is that despite some elements of scuffling in the construction industry, last year, year over year, we did double-digit growth. So it speaks to what we have been doing as a team that indeed, despite the shocks in the middle of the year, the hurricane and so on, we were still able to record double-digit growth and we expect that to continue this year.”
He said that will come from a renewed focus on customer satisfaction with staff being trained to work more efficiently, while tech is increasingly introduced to boost productivity.
With its planned listing on the Junior Market, Atlantic stands to benefit from significant tax incentives, including a five-year corporate income tax holiday followed by a reduced tax rate for an additional five years.
Atlantic plans to distribute up to 40 per cent of its net profits as dividends annually, subject to board approval and financial health.
