Thu | Feb 20, 2020

Proven eyes bigger APO target - Has ‘potential bank’ acquisition lined up; Sagicor to underwrite offer

Published:Wednesday | February 12, 2020 | 12:15 AMSteven Jackson - Senior Business Reporter
Proven CEO Christopher Williams.
Proven CEO Christopher Williams.

Proven Investments Limited will now be going after US$50 million, in its pending offer of new shares in the company, saying the recalibrated target was set after feedback from the market.

Sagicor Investments Jamaica Limited will co-arrange and fully underwrite the offer, which translates to $7 billion in local currency, the parties have said.

Initially, Proven was aiming for US$30 million ($4 billion) through an additional public offering or APO, which is expected to go to market by the end of this month.

“The big news is that the demand from the market came back so strong that we upsized the APO from US$30 million to US$50 million,” CEO of Proven Christopher Williams said on Monday.

“We demonstrated our trajectory to Sagicor and we are happy they have bought into it and put full strength of arsenal behind us and are appreciative of that,” he said.

Assuming Sagicor Investments ends up taking a stake in Proven under this deal, it would be acquiring a sizeable position in its peer for the first time.

No other entity in Sagicor Group Jamaica holds a top 10 interest in Proven Investments. It wasn’t immediately known whether other entities in Sagicor Group Jamaica hold minor interest in Proven Investments.

Asked why Sagicor Investments chose to back the APO, CEO Kevin Donaldson says the company views Proven as a strong franchise.

“We see value in Proven and the proposed utilisation Of capital and therefore believe that it was prudent to support the deal,” Donaldson said Tuesday.

“We are giving them the assurance that the APO will raise the requisite capital. Proven has a strong franchise and we are proud to support another expanding Jamaican business,” he said.

The underwriting agreement was disclosed to the market towards the end of January.

NEGOTIATIONS ADVANCED

“We are in advanced negotiations for another acquisition which required us to demonstrate access to capital. An underwriting achieves that,” Williams said.

Proven, a private equity firm with holdings in Jamaica and two other Caribbean markets, is hunting capital for its next round of acquisitions.

The company plans to take over a business in an undisclosed regional country and buy commercial real estate in Jamaica.

“The funds will be used for a pipeline of deal including a potential bank,” Williams said. Proven is aiming for a 75 per cent stake, he said.

The timeline for the APO remains uncertain until the prospectus gets approval from the Financial Services Commission, which regulates the securities sector. Disclosure of the pricing of the shares also awaits approval of the prospectus, which is already before the FSC for its consideration.

Proven listed on the USD market in 2011 and cross-listed on the JMD side of the stock market a few years later.

The stock traded down at US$0.27 on Monday before rising on Tuesday to US$0.31. The fall in price on Monday was about a quarter off January high, achieved prior to the announcement of the APO.

Proven said that over the years it has developed a ‘platform’ to look for deals at the right price. Its portfolio consists of Proven Wealth, Access Financial, Boslil Bank, International Financial Planning Limited, JMMB Group, Dream Entertainment and Proven REIT.

“We think the support for the APO demonstrates the strong value proposition that we offer. We are at a good multiple with our core earnings, not even including extraordinary gains,” said Williams. “Our earning per share will grow even more when we put the US$50 million to work,” he said.

For year ending March 2019, Proven recorded earnings of US$0.0111 per share.

In the current period, its EPS at nine months was US$0.0423. The company registered extraordinary performance for the period due to double-digit growth in core business operations, and a one-off gain from the partial sale of its holdings in microfinancier Access Financial Services.

Profit attributable to owners of the company totalled US$26.45 million compared to US$5.9 million a year earlier.

steven.jackson@gleanerjm.com