Steven Jackson, Business Reporter
NCB Capital Markets Limited will funnel US$36.3 million, or about J$3.37b, to other Michael Lee Chin-controlled companies from which it is purchasing two assets.
Both deals were announced last year but the purchase prices were just disclosed on Monday in a regulatory filing with the US Securities and Exchange Commission (SEC).
NCBCM is owned by National Commercial Bank Jamaica, which in turn is owned more than 60 per cent by Michael Lee Chin through his various companies, but chiefly through AIC Barbados, which holds 53 per cent of the banking group.
NCBCM is paying US$34 million to acquire over 96.24 per cent of Advantage General Insurance from AIC Barbados and a related company; and US$2.3 million for AIC Finance Limited. The deals are subject to approval.
The purchase of Advantage General is for "aggregate consideration of approximately J$3.09 billion (US$34m) subject to adjustment based on the book value of AGI at closing," said the notice filed by NCB with the SEC in keeping with its plans to launch an IPO in New York.
The price for AIC Finance is also "subject to adjustment based on AIC Finance Limited's final audited financial statements".
AIC Barbados along with ACF Holdings Insureco Limited owns 96.24 per cent of Advantage General. The remainder is held by local investor Donovan Lewis, the Financial Gleaner understands.
NCB chairman Michael Lee Chin controls both AIC and ACF Holdings, the notice indicated.
The bank defended the price paid for the assets as fair.
"The transaction was approved for the bank (NCB) by a special committee appointed by the board of directors, which included independent directors constituting less than a majority of the special committee, and for NCBCM by its board of directors. The completion of the transaction is subject to regulatory approval," said the filing.
Advantage General has a net worth of J$2.58 billion while AIC Finance holds some US$3.7 million in total equity, latest data indicates.
The acquisition of Advantage General represents the expansion of NCBCM's insurance holdings while AIC Finance will enable it to sell securities in the Trinidad and Tobago market. It already operates in the life market through NCB Insurance Company Limited, and will now have a presence in general insurance.
The NCBCM acquisitiion reversed plans by Advantage General to raise equity capital of up to J$650 million via listing on the Jamaica Stock Exchange. The application for the IPO was withdrawn last year.
The NCB banking group is Jamaica's largest bank defined by assets. Last year, the bank made J$10 billion net profit, down from a record J$13.8 billion in 2011.
Lee Chin's Portland Holdings acquired United General Insurance in 2006 from Neville Blythe, which was then rebranded as Advantage General. The acquisition was done through AIC Barbados.
Advantage General is licensed to write motor, property, pecuniary loss, liability and accident classes of business. It made J$867.9-million profit for its 2011 financial year or 278 per cent higher than 2010.
Advantage General has a network of 11 branches and over 260 employees nationwide.