Mayberry's LASF purchase more than a portfolio play
Mayberry Investments has made $170 million on its investment in Lasco Financial Services (LASF) in less than a month.
LASF's share price climbed by 56 per cent since the dealmaker increased its shareholdings in the cambio and remittance service company to 20 per cent - up from less than one per cent - on May 26.
The investment house's CEO, Gary Peart, reckons that the significant capital appreciation in the stock signals the
market's favourable response to news that Mayberry might have found another diamond in the rough - not too dissimilar to its investment in Access Financial Services nearly nine years before.
However, when Mayberry offloaded its 39 per cent stake in the micro lender in December, resulting in a $591 million gain that went straight to the company's bottom line, it also gave up a substantial chunk of its annual earnings. Its share of earnings from the associated company contributed to more than a quarter of its bottom line over the past five years.
Increased bottom line
The stake in LASF would have given Mayberry just $2 million during the first three months of 2015, which is a far cry from the $31 million it earned from its shares in Access in the comparative period in 2014.
But the investment house managed to increase its bottom line in its first quarter of this year without the share of the micro lender's profit, despite having to also fork out an additional $43 million in asset tax.
"The reality is that we have been able to replace the share of profit normally gained from Access within three months of selling our shares," said Peart at the company's annual general meeting in Kingston on Wednesday.
Perhaps more importantly, Mayberry doesn't view the LASF acquisition as just a portfolio play.
The company has plans that it hopes to execute with its new associated company, Mayberry chairman Christopher Berry
disclosed at the meeting with shareholders.
"We haven't been appointed to the board as yet, so we haven't discussed our ideas with them," Berry told Sunday Business as explanation for why further details of those plans would not be disclosed at this time.
"Our process is one in which we exchange ideas with the management and get everybody to agree," he said.
It is likely that LASF also sees opportunities through a strategic partnership, given that its chairman, Lascelles Chin, was the one to bring Mayberry on board - having sold them the shares - at a time when his company is aggressively expanding its cambio and remittance services through MoneyGram.
Focus on equity portfolio
Peart said, going forward, Mayberry plans to focus even more on maximising the performance of its equity portfolio.
That is not to say that the investment house has not been a major player in the market over the past decade. For example, the sale of its shares in Lascelles deMercado (the then owner of Wray and Nephew) to Trinidad-based Angostura in 2007 resulted in a $900 million cash windfall to Mayberry. In 2007, the investment house would also have taken over Salada Foods if its move to outbid majority owner Three Bears in a mandatory share buyout offer to shareholders had been successful
Notably, Mayberry's equities portfolio climbed from $600 million in value a decade ago to over $3 billion today. At the same, the company has been moving away from Government of Jamaica securities. Its holding of domestic government paper, which peaked in 2006 at close to $12 billion, stood at nearly half that amount at the end of 2014.
Berry figures that his company will be able to exit the retail repo business altogether in a "couple years", although they are not likely to go into unit trust offerings.
"We don't see it as a profitable; there are too many charges," Berry told Sunday Business.