EDITORIAL - Where Lasco's IPO and Dr Tufton's vision can meet

AMONG THE most interesting, and no doubt welcome, bit of corporate news to have emerged in Jamaica recently would have been this week's announcement by Lascelles Chin that he is about to take his Lasco Group public.

This initial public offering (IPO) is to be for 20 per cent of the company's stocks and is expected to raise around $450 million, suggesting that Mr Chin and his advisers value the Lasco Group at around J$2.25 billion. But, as a private company, Lasco's financials are not publicly available, so analysts will have to await the publication of the prospectus for the specifics, to begin to determine the real quality of the offer.

That Mr Chin is going this route suggests that the long dispute and court battles between him and his ex-wife over ownership and control of Lasco is now behind them, which is good for the company and its long-term future.

Opportune timing

However, in terms of the size of the company and its influence primarily as a distribution firm, it is clear that this will be among the most significant listings in Jamaica in recent times. And its timing is opportune for the Government which, in the face of continued negative growth, is keen to translate the recent uptick in business confidence into actual economic activity.

In this regard, the Lasco listing should be of particular interest to the agriculture minister, Dr Christopher Tufton, and his technocrats, who should find themselves closer to Mr Chin and advisers, listening to their plans and seeking to nudge them along a path that Mr Tufton has been articulating.

What is noteworthy is Mr Chin's suggestion that the IPO is not merely a way for him to cash in some of Lasco's value, or to raise money to retire debt or settle other obligations. The cash, largely, will be used for expansion, without the need for taking on debt and/or impeding cash flow.

"... We want to expand, and by increasing our manufacturing facilities it increases our addition of new products," said Mr Chin in announcing the planned IPO.

Although much of Lasco's success has been built on sourcing abroad and branding quality products competitively, we assume that the expanded manufacturing facilities to which Mr Chin referred will be in Jamaica, focusing primarily on agro-processing.

If this is indeed the case, it augurs well for Dr Tufton's vision of adding value to Jamaica's agricultural output, under 40 per cent of which goes on to further processing. In some countries in the hemisphere, the ratio is nearly double that of Jamaica. Lengthening the value chain means more of agricultural output is left in the domestic economy and the creation of higher-quality jobs.

For example, basic agriculture's contribution to GDP is now around six per cent, but when downstream processing is taken into account, it is nearer to 12 per cent. Costa Rica agriculture/ agrifood's contribution is 32.5 per cent.

Indeed, with government analysts suggesting that Jamaica could replace or substitute up to a third of its US$900 million a year in food imports, there are opportunities to be exploited. What is necessary are the policies to convince companies like Lasco of the merits of this - which is why we must insist on protection for domestic agriculture.

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