Tue | Sep 26, 2017

Proven buys merchant bank

Published:Wednesday | December 14, 2016 | 12:00 AMSteven Jackson
Christopher Williams, president & CEO of Proven Management Limited.

Proven Investments Limited (PIL) has acquired Bank of St Lucia International Limited (BOSLIL), a merchant bank which serves mostly high-net-worth clients in Panama and Uruguay.

The acquisition, which is Proven's largest to date and its first banking operation, will double the company's balance US$700 million. It awaits regulatory approval.

"It's a game changer," said Christopher Williams, chief executive officer of Proven Management Limited, the management company for proven Investments.

Williams argued that tourism and international banking remains the region's most competitive services, yet Jamaican entities are reluctant to enter the international banking space.

"Local banking isn't the thing," he declared in a Gleaner Business interview at Proven's Lady Musgrave offices. "No other financial institution in Jamaica has gone that direction. We are leading the way," Williams said.

The cost of the transaction was not disclosed, but Williams suggests it was substantial.

"You have to spend to enter this international banking space," he said, while noting that new asset sees Proven capturing a piece of the multitrillion-dollar international banking market.

Williams also declined to state the expected time frame to recoup the purchase price of the bank.

"We are happy with the investment," he responded, but said Proven will pay for the bank with a mixture of debt and equity.

REGULATORY APPROVAL

The company is in the process of raising $2 billion through a 8.25% preference share issue priced at $5 per share. Some of the proceeds will pay for the redemption of Proven's 8% prefs which will be redeemed December 23 at $5 per share.

BOSLIL is wholly owned by East Caribbean Financial Holding Company Limited, a publicly traded company listed on the East Caribbean Securities Exchange. The bank has branches St Lucia, Panama and Uruguay.

PIL signed an agreement to acquire 100 per cent of the shares. The closing of the deal awaits regulatory approval, expected by the first quarter of 2017.

As part of the deal, BOSLIL's long-standing CEO, Ryan Devaux, will be offered shareholding in the bank as incentive for him to remain as manager of the operation.

"We haven't finalised the percentage yet, but when we do, we will make an announcement," said Williams, who intends to keep the bank focused on the core Latin American clientele.

Earlier this year, Proven announced that it would also seek out small investments aimed at local start-ups. It would allow them the opportunity to provide venture capital funding in a series of businesses. But no deals emerged from that venture.

Williams later admitted that the firm had officially moved away from the venture capital space due to the varying levels of readiness of the firms which pitched to PIL.

Then in July, Proven indicated a desire to acquire up to three regional entities within the financial and energy sectors. Two of the private equity opportunities were in Haiti and the third in the Eastern Caribbean, it said. The firm planned to spend up at least US$15 million on these acquisitions individually. The BOSLIL deal is the first in that line-up.

Proven began operations in 2010. The group now includes Proven Wealth, Proven REIT, Asset Management Company and Proven Fund Management, all wholly owned; while it controls 49 per cent of Access Financial Services.

The new asset will double the size of Proven Investment's consolidated balance sheet, which sits at US$360 million. BOSLIL's balance sheet is US$336 million. "It's really a game changer," Williams reiterated.

For year ending March 2016, Proven Investments made profit of US$4.28 million, down from US$5.97 million. But the trajectory has shifted since then. At half year ending September 2016, net profit spiked to US$5.3 million from US$3.8 million in the prior year.

steven.jackson@gleanerjm.com