Tue | Jan 22, 2019

Sagicor angling for state pension fund business

Published:Friday | August 24, 2018 | 12:00 AM
Kevin Donaldson, CEO of Sagicor Investments Jamaica Limited.

With news of the planned privatisation of state-controlled pension fund assets creating quite a buzz in investment circles, the company that claims the top spot among fund managers is flexing its muscles as it angles for inclusion in the mix of possible private-sector managers of the funds.

Quick on the heels of last week's disclosure that the social security ministry had secured Cabinet approval to merge National Insurance Scheme, NIS, and the National Insurance Fund (NIF), and possibly seek a manager for $106 billion of NIF assets, Sagicor Investments Jamaica Limited said it would hit the road next month with three new collective funds products.

The company is the leader in the unit trust market with nearly $130 billion under management.

Sister company Sagicor Life Jamaica, which is the flagship operation of insurance and banking conglomerate Sagicor Group Jamaica, also has the largest pool of private pension funds under management, totalling $187 billion last year.

Sagicor Investments CEO Kevin Donaldson would not disclose details of the products coming down the pike, but declared with some drama that they have the potential, when announced, to "shake the competition to their core".

The company also has "three or four initiatives" in the pipeline either for major investment or corporate financing, but as to the details, Donaldson only trotted out talking points that they would "advance Jamaica's development".

First in line

Securities industry sources say NCB Capital Markets already appears to be first in line, were management of the NIF assets to be privatised. That information has not been confirmed. Some players want the State to carve up the $106-billion portfolio - which is invested in real estate, resorts, fixed-income securities and equities - among several fund managers.

Donaldson said Sagicor expects the Government to be transparent with the selection process and go to the market for bids.

His team is readying itself for that, and he is not shy about what he sees as Sagicor's better-than-average chances of bagging the deal to manage at least a portion of the funds that constitute the pension and social security lifeline for thousands of Jamaicans who are statutorily mandated to contribute to the NIS. Those contributions are managed and invested by NIF.

Donaldson insists that with its track record, Sagicor Investments, which manages the Sigma portfolio, cannot be topped by any of the other eight collective scheme managers in a fair bid for pooled funds management business in Jamaica.

"We are the largest fund manager in the country and one of the largest brokers, so Sagicor has one of the most efficient platforms in the country. Even third-party pension fund managers use our administrative side," he told the Financial Gleaner.

Sagicor's investments, he said, are exposed to all asset classes, including stocks, bonds, real estate and exotic investment structures.

The Ministry of Labour & Social Security has not yet made a final determination on whether to put the NIF assets into private hands. The determination will come after the merger, which will see the two departments spun off as a statutory agency.

"If there is a decision to go that route we would have to be considered," Donaldson insisted.

He, too, has said the government should consider splitting up the portfolio, saying global experience shows that big funds hire different managers for various aspects of fund investment. The social security ministry could carve the assets into the segments such as those earmarked for growth or income generation, or otherwise create a demarcation based on asset class.

"The NIF is a treasure and it should be managed properly," Donaldson offered. "I think the NIF has done a good job, but it could be improved with private handling. There is an opportunity for specialisation and choosing the entity that will help get more efficiency."

Sagicor Investments was a public company up to 2014 when its parent decided to take the brokerage private.

However, Donaldson provided fresh numbers for the firm, saying its high-performing Sigma Fund started the year at $105 billion and is currently valued at nearly $130 billion, while balance sheet investments amount to $86 billion.

Across the Sagicor Group Jamaica, funds under management increased to $724 billion as at June.

Sagicor Investments is in the process of setting up a new subsidiary in the Cayman Islands. Inside its home market, one of its latest jobs was broking Cornerstone United Holdings Jamaica Limited's majority acquisition of Barita Investments Limited.

The company is also working on bringing several IPOs to market, one of which is a start-up in the education sector, Donaldson said.