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A reversal of roles

Thursday, December 14, 2017

The announcement last Friday of Jamaican financial services powerhouse NCB Financial Group’s desire to takeover iconic Trinidadian insurance juggernaut Guardian Holdings Ltd hit the local business circuit with a bang.

Truthfully, proposed acquisitions of this size don’t come along every day.

While many will engage in the typically academic debate over whether the per share offer price is fair or not (US$2.35 per share) there are a few broader narrative elements to this story that warrant consideration.

All told, of the more recent major acquisitions that have taken place in T&T, two have been by Jamaican companies.*

As such, if one was to sum up the ethos of Jamaica right now, and the deal-making moves of its businessmen, only one word would come to mind: confidence—both inside the country and externally.

Further, what usually drives confidence is a plan and, as stated in this space a few weeks ago, it seems that Jamaica has a plan that—for all intents and purposes—appears to be working.

Can the same legitimately be said about T&T?

Put differently, are our local investors just as confident in T&T and the future prospects of its businesses as foreign capital seems to be?

In essence, it seems as if a role reversal of sorts has taken place.

To start with, few businessmen in the Caribbean embody the hardy entrepreneurial spirit of NCBJ chairman and majority shareholder Michael Lee-Chin. This space doesn’t provide for a history lesson on Mr Lee-Chin’s travails, but what should be noted is his ability to drive businesses that he’s taken an active interest in to higher levels of performance.

His acquisition of NCBJ in 2002, and subsequent build-out of the company to become the largest and most profitable financial services group in Jamaica stand as testament to this fact.

Mr Lee-Chin is as swash-buckling as they come. His expressed desire to build a “pan-Caribbean financial services group” and the fact that GHL—with its already deep Caribbean footprint—has languished on the stock exchange for years evidence a “made-for-each-other” scenario that perhaps could not have been scripted better by the likes of Hollywood.

That said, could (and should) a deal of this magnitude have been undertaken by our own local tycoons?

One is tempted to believe that our local investors possess the wealth and acumen to do a deal of this order. But have T&T investors gone soft? Or have they been crowded-out by governments that have involved themselves in areas better suited for private enterprise?

That a company like GHL, with its attractive dividend yield and low price-to-earnings multiple was not seen as the quintessential value play by any of our large financial services groups, or conglomerates, is certainly a head-scratcher.

Here again, the issue of confidence comes into play.

Perhaps it is easier for our local businessmen to invest in car parks, malls and foreign franchises that lack the kind of visionary moves needed to alter T&T’s paradigm, than to tackle investments the size of a GHL—in spite of its reach across the entire Caribbean region. Or could it be that in the post-CL Financial world, psyches and mindsets have been altered where risk-taking is concerned? However viewed, and in light of the NCBJ bid, these are all questions that merit active thought.

To be fair, much of what has contributed to the establishment of the Jamaican economy has been funded by T&T capital. Many of our local businessmen have invested heavily in plant and equipment in Jamrock.

Further, and as discussed before, because of the lack of clear signals coming from the state sector (which undermines confidence), and with the crippling foreign exchange situation being what it is, many businessmen have begun to look overseas for potentially greener pastures. Understandable moves.

However, as T&T’s fortunes continue to ebb, the real possibility exists that more deals of this nature can come to market and perhaps, it is in our investors’ best interest to be attuned to them. Usually, the choicest parts of the buffet go to those with the sharpest eye and keenest appetite.

* Cemex acquiring a majority stake in TCL, JMMB acquiring 100 per cent control over Intercommercial Bank, and now NCBGF’s likely scoop of GHL.

Andre Worrell


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