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Potential Puerto Rico IPOs
by JEFFRY VALENTIN-MARI
June 29, 2000
An IPO is a major step in a companys life, full of legal and financial complexity. Candidates must deal with a variety of regulatory agenciessuch as the Securities and Exchange Commission, the National Association of Securities Dealers, and state authorities. The process involves attorneys, CPAs, underwriters, and printers.
Going public is not for every company. Size is important. Experts agree that most IPO candidates should have no less than $40 million to $50 million in annual revenuewhich means about 100 locally owned companies in Puerto Rico.
One possible candidate is Triple-Sthe second largest locally owned company and the largest privately heldwhich had 1998 revenue of $892.1 million. Still, going public is not in the cards for Triple S. "Our corporation has studied the possibility of converting into a publicly owned company, but we have decided to stay as a privately owned corporation," Miguel A. Vazquez, Triple-S Management Corp. President, told CARIBBEAN BUSINESS.
In the wholesale business, Borshow Hosp. & Med. Supplies Inc., with 1998 revenue sales of $102.5 million would be a potential IPO candidate. "Definitely, IPOs is an important alternative to raise operational capital. At the present time, however, our company has covered all operational necessities without the need of selling company stock," Jon Borschow, President of Borschow Hosp. & Med. Supplies Inc., told CARIBBEAN BUSINESS. "We do not discard the possibility of preparing a IPO in the future, but our present objective is to strengthen the companys technological advantages keeping our annual growth rate of 30%".
Bella International Corp., Puerto Ricos 28th largest locally owned company with revenue of $155.8 million in 1998, is also not interested. "The IPO process is not included in our immediate plans. Since our foundation back in 1963, we have been very successful in raising capital and we understand that a IPO option could limit our managerial actions and decisions," Jeronimo Esteve, Bella International President, told CARIBBEAN BUSINESS.
On the other hand, much smaller local high-tech or Internet based companies with huge potential for growth outside Puerto Rico may soon prove to be more likely candidates to become publicly owned corporations.
Companies like Abaco and MicroJuris.com have been highly successful in raising venture capital to expand their business not only in Puerto Rico but also outside the island. They may soon need more.
Abacoa local wireless software manufacturerannounced earlier this month a $20 million injection in venture capital funding from various investors. "This new investment is the final step before conducting an IPO planned for next year. Right now the market isnt right for going public. And the additional funds will carry us until the IPO is possible," said Fernandez Alvarez, CEO and President of Abaco (CB June 22).
In 1999, Abaco had sales of $20 million and it expects to reach $30 million in 2000. Approximately 80% of Abacos research and development work force is local and product development is conducted between its San Juan and Atlanta headquarters. However, less than 1% of Abacos revenue comes from sales in Puerto Rico.
Last year, MicroJuris.comthe San Juan based legal web portalraised $2.7 million in equity capital from its original partners and a $1.5 million loan from the Economic Development Bank for Puerto Rico (CB Feb. 10).
"We are considering the conversion into a publicly owned company as part of a broad strategy to complete the expansion plans of our company," Fernando Lloveras, MicroJuris.com President, told CARIBBEAN BUSINESS.
"As the first professional portal of its kind available in the Internet, we expect more than 50% of our revenue next year to originate outside Puerto Rico. This is the result of our aggressive expansion in the global market, primarily in Latin America," Lloveras added.
MicroJuris has expanded operations not only in Puerto Rico, but also to Argentina, Venezuela, Brazil, and Chile. "We expect to offer our legal services to other countries such as Mexico, Portugal, and Spain by the first half of 2001", Lloveras explained.
Funded in 1989, MicroJuris.com is the only legal network that provides specialized services to legal professionals in Latin America. The website receives an average of 2.5 million hits every month.
This Caribbean Business article appears courtesy of Casiano Communications.