NCB Group to grow revenues to US$1.5b with GHL assets
JAMAICA-BASED NCB Financial Group (NCBFG) has indicated that its consolidated revenues with Trinidadbased Guardian Holding Limited (GHL) would surpass US$1.5 billion, or just under J$200 billion, provided GHL shareholders accept the offer now before them to sell their shares.
Additionally, the acquisition would see NCBFG assess the operations and management of GHL with a move to effect efficiencies and synergies.
“If the offer is successful, after the consummation of the acquisition, NCBFG intends to conduct a comprehensive review of GHL’s businesses, operations, capitalisation, corporate structure and management with a view to maximising the development of GHL’s potential in conjunction with NCBFG’s businesses,” stated NCB in the offer circular released on the conglomerate’s website.
The group added that the “collaboration” between NCBFG and GHL should allow customers to benefit from a broader range of services provided in more efficient ways. NCBFG added that it anticipates that its added pan-Caribbean reach will offer additional growth opportunities.
‘The NCB Group seeks to take a majority stake in GHL, thereby creating a truly panCaribbean, diversified, financial-services conglomerate with a footprint in more than 15 territories and expected total gross revenues of over US$1.5 billion.’
TRULY PAN-CARIBBEAN
“The NCB Group seeks to take a majority stake in GHL, thereby creating a truly panCaribbean, diversified, financial-services conglomerate with a footprint in more than 15 territories and expected total gross revenues of over US$1.5 billion,” stated the circular.
NCB group tried to consummate the deal a year earlier but failed due to activist shareholder outcry, which led to a legal fight. At the time, the combined group would have earned about US$1.3 billion in revenues for the 2017 financial year.
The acquisition would make NCBFG among the largest financial entities in the region by revenues. Based on the fast profit growth in the 2018 financial year, the group executives already described NCBFG as attaining for the first time the title of being the most profitable financial entity in the Anglophone Caribbean, earning J$28.6 billion net profit for its full year.
NCBFG made J$76 billion in revenues, or about US$595 million, for its September 2018 year end, compared with J$59.5 billion, or US$468 million, in 2017. Investors still await GHL full results as the year end was in December 2018. GHL, however, made TT$5.6 billion in revenues, or roughly US$860 million for its December 2017 year end.
Last week, NCBFG announced its bid to acquire additional shares in GHL in an offer that will close on February 7. GHL is a large regional insurance provider with operations in several countries. The lead broker for the offer is Republic Securities Limited. NCB stated that full acceptance of the offer to increase its holding from 29.99 per cent to 62 per cent would result in a cash payment by NCBFG of the aggregate sum of up to US$207.1 million to shareholders of GHL.
NCB Global expects to acquire up to 74.23 million additional ordinary shares in GHL for US$2.79 each. Auditing firm EY Jamaica was contracted by NCBFG in October 2018 to determine the fair market value of GHL. While NCB Financial Group is seeking to acquire up to 62 per cent of GHL, the offer requires that it acquire at least 50.01 per cent.
An earlier release indicated that NCB Global would receive funding of US$45 million to partially finance the share purchase from key shareholders, including Arthur Lok Jack, Shiraz Ahamad, Reyaz Ahamad and Imtiaz Ahamad. The circular indicated that the term of the financing will last for three years at 6.5 per cent interest.
The bank initially launched its takeover offer for Guardian at the end of 2017, having acquired its initial holdings in the insurance conglomerate in May 2016. However, minority shareholders revolted at the takeover price of US$2.35 per share and demanded an offer that was closer to the US$3.27 per share that NCB paid for the early stake.
The dispute was eventually settled before the Trinidad and Tobago Securities and Exchange Commission. In November 2018, the commission ruled that NCB should offer no less than US$2.65 for each share, but NCB increased its offer to US$2.79.