Proven pushes ahead
Despite the pandemic throwing proven investments Limited’s (pil) plans into a tailspin, the st Lucia registered company remains resolute on expanding its reach across the region as it looks to hit the Us$1-billion total asset mark by the end of the 2021 calendar year through an array of acquisitions and other deals.
The company had just opened its Us$75-million additional public offering (APO) on the day Jamaica confirmed its first COVID-19 case. After putting the offer on pause with its eventual cancellation, PIL went into a defensive mode as its fair value reserve went negative with the collapsing asset prices across the world. This even led to the company injecting US$2 million into Boslil Bank Limited to avoid a potential regulatory breach.
A year later, PIL’S normalised net profit attributable to shareholders was up by four per cent to US$11.53 million ($1.69 billion) while its total assets increased by 12 per cent to US$674.54 million ($98.87 billion).
The company currently has two acquisitions pending regulatory approval with its Us$21.45-million acquisition of a 50.5 per cent stake in Robert’s Manufacturing Limited finalised last month.
“It was a tough year, but the results at the end was very heartwarming. I’m very happy with how that business [Proven Wealth] is growing and evolving. They’ve been able to grow market share in all segments including funds under management, corporate finance and in both cambio and securities trading. We’re not expecting any adjustments to our current tax position, but obviously, the attractiveness of St Lucia going forward is of concern. We’re grandfathered so it doesn’t affect our existing operations, ” stated co-founder and chief executive officer of Proven Management Limited, Christopher Williams, commenting on PIL’S 2021 financial year (FY) performance.
PIL’S worst-performing subsidiaries and associates during the year were International Financial Planning Limited (IFP) and Dream Entertainment Limited. IFP’S net profit declined by 43 per cent to US$0.41 million due to the 24 per cent drop in fees and commissions segment of revenue. Dream contributed a share of loss of US$68,000 for PIL which meant that the entertainment company recorded a loss of US$340,000 ($49.84 million) in the FY.
“IFP was our worst performer, and they were significantly constricted by the lockdowns in the Cayman and Bermudan markets. Those countries were very strict with lockdowns which collapsed sales. We do expect IFP to bounce back.
The infrastructure is in place as we used the time to redevelop the website, build out the software and so on. We had a rough year, but we don’t think it’s going to be a typical year,” Williams said.
“Obviously Dream had zero income, but as you can see, opportunities are on the horizon. They’ve used the opportunity to export more by going into Florida and New York. Certainly, we expect in the next 24 months for Jamaica to return to normal. Dream has been hit as the pandemic hit entertainment hard. Luckily, it’s a small investment for us.”
Boslil and JMMB Group Limited (JMMBGL) were the best performers for PIL with each company recording their best-ever year of profitability. Boslil generated a 29 per cent improvement in its net profit to US$6.26 million against the backdrop of a 25 per cent dip in revenue to US$7.21 million. Boslil has returned US$9.25 million in capital to PIL in the last four FY’S versus the acquisition price of US$12.6 million paid in March 2017. JMMBGL saw its profit attributable to shareholders grow by seven per cent to $7.51 billion, but only contributed US$10.32 million to PIL’S share of profit which was less than the prior year due to the foreign currency differences. Despite the strong performance of JMMBGL and expected uptick in future profitability, Williams explained that PIL hadn’t discussed increasing its stake in the financial conglomerate.
“That’s not a question we’ve debated. We are very happy with the performance and love the price. If we were buying, now is the time to buy. We’re satisfied with the exposure we have now and the company’s performance. We’re very confident that the investment community will see the bargain that’s on the table now for JMMBGL. The price will adjust and correct itself accordingly. The price acts as a reference of sentiment, but we’re happy with JMMBGL’S outlook and profitability.
“Boslil looks like it will go down as one of our best investments ever. It really is growing strong and customers are extremely loyal. They grew their deposit base significantly and Boslil is a very critical contributor to our profits. Proven remains focused on executing on its corporate strategy for this asset which will result in the implementation of initiatives to drive the expansion of the balance sheet and further diversify revenues while scaling the current operating platform,” explained Williams.
Real Properties Limited (RPL) saw a 12 per decline in profits to US$2.09 million as there were no development projects which were closed in the year. The company’s highly renowned Via at Braemar project suffered a slight fallout in the year due to the pandemic. However, Williams explained that resales are progressing well with 90 per cent of the project sold out. Its César project is more than 50 per cent sold out with the company breaking ground for its joint venture on Omega Drive in the Cayman Islands recently. The one difficulty that the CEO noted, which will impact the real estate segment, is the choice of where to setup its companies for its various real estate projects due to the less attractive nature of St Lucia. PIL injected US$2.86 million in RPL to maintain its 100 per cent stake in the subsidiary.
“You’re not going to get that benefit of that tax efficiency without a significant investment in St Lucia in order to prove [economic] substance. The rest of the Caribbean is fine with the Cayman Islands, Bahamas, Bermuda and the British Virgin Islands. We have quite a number of markets to utilise. We do a number of investments in Jamaica, but we’re getting calls by every country to do business,” said Williams.
Proven is currently looking to close out on its Fidelity Bank (Cayman) Limited and Heritage Funds International Limited deals later in the year as it puts the proceeds from its US 30.28million APO to work. Williams remains confident of the future of the company especially as it enters the next decade of opportunity. Williams and two other co-founders purchased 6.47 million shares in the APO for approximately US$1.43 million.
“We’re extremely motivated and getting some good momentum. We’re not satisfied with where Proven is now and feel that we can build this business to double from where it stands currently. We’re focused on doubling the business. We have not gotten approval from the Cayman Islands Monetary Authority for the Fidelity Bank acquisition. It looks like it’s going to be at least another three months before it’s closed.”