Tue | Jul 16, 2019

Sagicor Financial sold - Canadian private-equity firm to pay US$536m for insurance conglomerate; Separate deal sealed to acquire Scotia insurance businesses

Published:Wednesday | November 28, 2018 | 12:00 AMAvia Collinder/Business Reporter
CEO of Sagicor Financial Corporation, Dodridge Miller.

The acquisition of regional financial conglomerate Sagicor Financial Corporation Limited (SFC) by Canadian private-equity firm Alignvest will not affect shareholders of the Jamaican subsidiary, says president and CEO of Sagicor Group Jamaica Limited Christopher Zacca.

"The transaction is between Sagicor Financial Corp and Alignvest. SFC owns 49.1 per cent of Sagicor Group Jamaica, and that won't change with the transaction," Zacca told the Financial Gleaner.

Sagicor Financial, which is listed on the stock exchanges in Barbados, Trinidad and Tobago and London, announced on Tuesday that it had entered into a definitive agreement with Alignvest Acquisition II Corporation under which Alignvest plans to acquire 100 per cent of Sagicor for US$536 million, or US$1.75 per share.

Simultaneously, the parties announced that Alignvest will acquire Scotiabank's life-insurance operations in Jamaica and Trinidad and Tobago. As part of that deal, the value of which was not disclosed, Sagicor will provide insurance solutions to Scotiabank's clients in the two markets under a 20-year exclusive contract.

Alignvest will make an offer to Sagicor Financial shareholders on December 6, who may opt for cash of US$1.75 per share, exchange their SFC shares for a stake in Alignvest, or accept a combination of cash and shares.

However, since Sagicor Financial owns less than 50 per cent of Sagicor Group Jamaica, that acquisition is not expected to trigger a mandatory offer to owners of the Jamaican operation by Alignvest, hence Zacca's assurance that nothing will change for owners of the Jamaican operation.

Alignvest's parent company, Alignvest Management Corporation, describes itself as an alternative investment-management firm. Its leaders are Reza Satchu, Timothy Hodgson, Donald Raymond, and Nadir Mohamed as chairman.

Alignvest Acquisition II is a special-purpose company that was listed on the Toronto Stock Exchange in May 2017 to be used solely as the vehicle for the acquisition of Sagicor Financial.

The near-two-decade-old Caribbean company operates in 22 markets, including countries in the United States and the Caribbean. Jamaica is one of its top-performing markets.

Sagicor Financial - whose products and services include life, health, and general insurance; banking; pensions; annuities; and real estate - held total assets of US$6.8 billion.

The US$1.75 price offered by Alignvest for SFC shares is a 70-cent premium on the stock price of BDS$2.10, or US$1.05, per share in Sagicor's home market of Barbados on Monday. The stock closed up at BDS$2.96, or US$1.48, on Tuesday after the deal was announced.

The acquisition is pending regulatory approval, and the new scheme of arrangement also requires the approval of Sagicor Financial shareholders. But once the transaction closes, Sagicor Financial will be delisted in Barbados, Trinidad, and London, while Alignvest will continue to trade on the Toronto exchange.

The transaction is expected to close during the first quarter or early in the second quarter of 2019.

Alignvest will continue operating from Ontario, Canada, but will be incorporated in Bermuda. Sagicor Financial's operating base will remain in Barbados, while in Jamaica, employees in Scotia Jamaica Life Insurance Company are expected to join Sagicor Life Jamaica.

Scotia Group representatives were said to be in a board meeting when the Financial Gleaner called for comment, but both Scotia and Alignvest say the deal is subject to regulatory approval and expected to close in 2020.

Sagicor Financial projects that the insurance partnership will grow net income by a combined US$30 million annually in the affected markets.

The board of directors of Alignvest, or the 'new Sagicor', is expected to include chairman Tim Hodgson, who is also a managing partner of Alignvest Management and a former CEO of Goldman Sachs Canada; Sagicor Financial CEO Dodridge D. Miller; UWI Vice-Chancellor Sir Hilary Beckles; former CEO of the Guarantee and Zurich Insurance Canada, Alister Campbell; chairman of Guardian Media Limited, Peter Clarke; former chief credit officer for Global Financial Institutions & Private Equity Funds at IFC, Monish Dutt; chairman and CEO of PanJam Investment Limited, Stephen Facey; co-founder and president of Highgate Hotels LP, Mahmood Khimji; senior partner of McNamara & Company, Stephen McNamara; former CEO of CIBC FirstCaribbean International Bank, RikParkhill; and co-founder and managing partner of Alignvest Management, Reza Satchu.

avia.collinder@gleanerjm.com