Norbrook Equity Partners taps capital market
Norbrook Equity Partners led by Khary Robinson quietly took in the equivalent of $677.25 million of financing through private placements in the Jamaican market last week, supported entirely by institutional investors.
Robinson said he went hunting for capital to push through with new acquisitions, even though he declined to name the targets.
In a deal structured by NCB Capital Markets Limited, Norbrook borrowed US$5.25 million from private investors and issued them with USD-indexed redeemable preference shares in exchange for the capital. The prefs carry no voting rights and are non-convertible to common shares. They will be redeemed in five years.
Robinson said the take-up of the offer is an endorsement of his nine-year-old company by the right people.
"It is sophisticated investors who've seen a lot of deals and understand the market. It is they who have given us the vote of confidence," he told Gleaner Business in an interview on Monday.
Norbrook is an investment holding company registered offshore in St Lucia but which has operations in Jamaica, other parts of the Caribbean, and the United States.
Norbrook currently owns and operates seven companies with 240 employees, including Mailpac Services Limited, an e-commerce logistics firm. The group, whose businesses span water distribution, logistics and courier services, and ground transportation, has been financing a series of acquisitions and mergers from internally-generated resources, according to Robinson, the executive chairman.
He says that quiet mode of operation has allowed them do deals that have spurred growth.
"Our strategy of being discreet has allowed us to have certain conversations with business interests that may be cautious. We've always been able to say to people that their information is safe with us, we are private and confidential and that has always been a benefit," Robinson said.
So quiet are the operations that Norbrook managed to acquire the Jamaican operations of Hertz car rental in August 2016 along with its budget market subsidiary Firefly, without fanfare.
Robinson says the idea of turning to private investors came after he decided to give up on getting bank financing for the Hertz acquisition.
Norbrook started nearly a decade ago initially in the business process outsourcing market with a company called international Data Processors. It later added another BPO firm called Carisis, a medical records and billing operation.
Then Robinson quickly bought up three courier service operations and later sold one of them, Airpak Express, to Tara Couriers.
Robinson says Norbrook did it all using its own resources, but he refused to disclose just how much the group has invested over time.
"We've never taken outside capital, so everything we've built has been on internally generated capital. We feel that at this time, after eight years of doing this, we're ready for the wider arena," he said.
Pressed as to how he would invest the new capital at his disposal, Robinson indicated a shift away from the group's starting point. In fact, the company's website indicates that International Data Processors is one of the investments that Norbrook has exited over time.
"We're actually moving away from local logistics. Our last two acquisitions were the landscaping business in Florida and Hertz. We like the tourism space, we like the US diversification and the only other area that we've had a very keen interest for a while but have not been able to pull the trigger, so to speak, is the BPO sector," Robinson said.
In the courier market, Norbrook's most high-profile operation locally is Mailpac. Another rival courier operation, ShipMe, has risen in recent years, but Robinson said the competing firm has, paradoxically, served to stir up business.
"Unlike what some people may think, their entrance to the market has done wonders for us because they have created a lot of noise in the industry, which enhances awareness," he said.
"I will admit that they forced us to be more vigilant about our offerings and innovation, but that's a good thing."
Meantime, Norbrook remains in acquisition mode and its focus now is on expanding internationally. For that, Robinson said, he will need to raise more hard currency.
His plans include a deeper dive into the landscaping business in Miami, where Norbrook is looking to finalise the acquisition of a second operation in coming weeks, and close the deal on a third soon after.
With the exception of the Hertz operation, Norbrook's business model is predicated on being nimble.
"We try to shy away from businesses that are capex-heavy. In fact, the only business that is near to that is Hertz but what we like about it is that there is a limited segment of brands because of the consolidation, globally. That has given us a space that we know, and one which is well defined," said Robinson.
Norbrook has weighed plans to list on the Jamaica Stock Exchange but got sidetracked by the negotiations around the Hertz deal. However, Robinson says, they will return to considering a listing by 2018.
In the meantime, he is inclined towards tapping financing from private investors.
"Our business model is growth, and growth is going to take capital. We've been fortunate enough to fund ourselves for nine years from internal resources but there is no discounting the value of partnerships, and so yes we will look at the market again," he said.