CORNERSTONE ACQUIRES 100% OF MF&G MERCHANT BANK
IN a move towards fulfilling its strategic aim to become a fully integrated financial services group, Cornerstone United Holdings Jamaica Limited (CUHJL) has acquired 100 per cent ownership of MF&G Trust & Finance (MF&G T&F).
MF&G is Jamaica’s sole remaining merchant bank, and this addition to Cornerstone’s portfolio of companies is expected to have a significant impact on growth in revenues, profitability, and overall shareholder value in the medium to long term.
In December 2016, CUHJL, a privately held investment holding company, acquired an 80 per cent majority stake in MF&G, and in February 2019, it acquired the remaining 20 per cent, making it a wholly owned subsidiary.
The move is in keeping with Cornerstone’s aggressive growth plan, having acquired Barita Investments Limited and restructured CUHJL’S holdings
less than a year ago.
CUHJL completed the transaction to acquire 75 per cent of the ordinary shares of Barita Investments, a publicly traded company on the Jamaica Stock Exchange (JSE), on August 14, 2018. Barita, and its subsidiary Barita Unit Trusts Management Company Limited, handle over $70 billion of funds under management with a complement of 80 members of staff.
Barita serves its clients islandwide through its head office in New Kingston and branches in Mandeville and Montego Bay. The company has built a sound reputation in the areas of equities and fixed income trading, foreign currency trading, wealth management, unitised portfolio management and investment research.
After an efficient turnaround of a $5-billion bond through Sagicor Investments Ltd, Cornerstone’s founder, Paul Simpson, expects to move quickly on putting into effect the planned changes to its subsidiaries’ business models to gain market share and scale quickly by delivering superior value propositions to both consumers and businesses.
“CUHJL is bullish on Jamaica and its prospects. We believe that this is an especially opportune time to bring value-added and cost-effective solutions to the financial services markets here. Our clients deserve nothing less,” Simpson said.
CUHJL now has an application pending before the Bank of Jamaica (BOJ) to become a financial holding company, where not just the bank, but both subsidiaries would be owned by Cornerstone.
Subject to regulatory approval, Cornerstone intends to deliver superior products and customer experiences under a single “Barita” brand, where MF&G will be rebranded using the Barita name, which has amassed significant brand equity through its 41-year legacy as one of Jamaica’s longest-standing stockbroking companies.
To broaden the core banking product and service offerings of MF&G T&F, CUHJL also plans to apply for a commercial banking licence later this year.
As a deposit-taking institution, MF&G is licensed by the BOJ to take deposits from the public, which it then uses to make loans and investments. It is also a licensed FX dealer.
Through the acquisition, CUHJL has enhanced its ability to broaden its product set and market reach. CUHJL is taking a keen look at the present market opportunities (customer pain points, opportunities being missed by incumbents, underserved segments) all through the lens of globally leading disruptive financial services technologies (fintech).
It intends, with permission from the regulators, to use fintech for both a better overall client experience and enhanced operating efficiencies to be a market disruptor and serious challenger to the larger incumbents.
CUHJL’S aims to build a “financial services company that customers want to and like to do business with”.
In February 2019, Cornerstone announced a 380 per cent improvement in net profit of its newly acquired subsidiary, Barita, for the first quarter of the 2019 financial year.
CUHJL says that at the appropriate time it will broaden its investor base by inviting wider participation in its ownership.
The Barita Group is made up of Barita Investments Limited and its subsidiary Barita Unit Trusts Management Company Limited.
Barita was founded by Rita Humphries-lewin in 1977.
In 2018 CUHJL acquired majority shares in Barita Investments Limited, in its aim to establish an integrated group of financial services entities to serve select commercial and retail markets across Jamaica.