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CAPITAL & CREDIT, FOR SALE OR NOT FOR SALE? Why the rumours persist

Ryland Campbell once commented that if the right price was presented to him he would give it serious consideration.

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For the better part of 2008 and some would say going back to 2007 there were persistent rumours that two companies were quietly seeking and in negotiation with potential buyers. The two companies were the now reorganised Capital and Credit Financial Group (CCFG) headed by Ryland Campbell and the Wayne Chen controlled SuperPlus retail chain.

In the case of Capital & Credit the company was again forced to publicly deny in July last year that it’s up for sale. Capital and Credit was not only denying what it says are ‘persistent rumours’ that the company is being offered up for sale, but says it is not even in talks with any suitor. The denial, filed via a stock market notice, follows persistent reports over several years that the Ryland Campbell controlled company was on the market and looking for buyers. “Such information is incorrect and not true,” said the company in a statement issued through the Jamaica Stock Exchange.

The genesis of the rumour according to one financial analyst goes as far back as 2006, heightened by the Scotia acquisition of DBG and comments made by then Finance Minister Omar Davis. What was slowly emerging at the time was the big question. Is the stand alone merchant bank model sustainable and relevant?
Back in 2006 then Finance Minister Dr Omar Davies was of the firm view that the financial sector would witness more consolidation initiatives similar to the Bank of Nova Scotia/Dehring Bunting and Golding (BNS/DB&G) acquisition offer, as the rates on government paper continued to fall. Since then interest rates on Treasury bills have fallen further.

Commenting on what was driving the BNS/DB&G deal that was representative of the present reorganisation/consolidation initiatives of the sector, Davies said: “Apart from the real issue of reduced returns on government paper, when the bank looked at its client profile and realised it comprised mainly elderly folks with pass book accounts and did not include sufficient young, upwardly mobile investment-savvy individuals, it realised it had to do something.”

Also weighing on the matter was Keith Duncan, president and CEO of Jamaica Money Market Brokers (JMMB), starting from the position of the narrowing on the spreads on investments – a point he underscored at his company’s Annual General Meeting, said, “Financial entities will definitely have to push revenue growth and emphasise new product development”. According to Duncan, the time was now right for the private sector to bring new corporate issues to the market. In this regard, he expressed concern that the money market remained dominated by government issues.

Christopher Berry, Chairman and CEO of Mayberry Investments- a company that had already taken advantage of the relatively stable microenvironment at the time to reposition itself and acquired 49 per cent interest in a microcredit lending agency – views the then microenvironment of reduced interest rates and controlled inflation as positive developments for investors who play the stock market.

A point to note is that while Dr Davies believed that reduced rates will trigger more consolidation, he was more cautious about how soon the reduced rates would filter through the commercial banking system and impact on the real economy.

In October 2006, Peter Bunting former CEO of DBG had said in published reports that, “One of the reasons we are selling is that the profit growth exhibited by the securities dealers sub-sector in the last 12 months has topped out”.

“The market value of DB&G is US$100 million. That value transaction can only be done by very few players. Plus the market has been very illiquid over the past year, so an opportunity for long-term shareholders to cash out is a rare one,” explained Bunting. Another reason why the executive management team has taken the decision to sell is, “The previous high rate of profit growth is unsustainable in the securities dealer sub sector.”

Capital and Credit is one of the last of the independent merchant banks and is now the largest player in the sector. The trend now is for merchant banks to convert to commercial banks allowing then to access cheaper funds by way of customer deposits.
In April last year it was announced that Jamaica Money Markets Brokers Limited had applied to the central bank for a commercial banking licence, which, if approved, will grow the sector to eight licensees. In November Pan Caribbean Financial Services (PCFS) officially launched its commercial banking arm with five branches nationwide, targeting an existing 15,000-strong customer base.

The GraceKennedy controlled First Global Bank was converted from the former merchant bank George and Brandy and DBG Merchant Bank was acquired by ScotiaBank Group, merged with its own investment unit to form Scotia DBG.

First Caribbean International Bank Jamaica is the only major commercial bank operating in Jamaica without a stock brokerage unit and is strongly viewed as the possible and potential purchasers of the now restructures Capital and Credit Financial Group.

RBTT is affiliated to Guardian Asset Management and so technically has brokerage unit in the mix already and National Commercial Bank owns NCB Capital Markets.

BNS back in 2006 saw an opportunity to grow shareholder wealth with the DBG acquisition. “We contemplated whether to build or buy a brokerage house. We do not have a particular expertise in this area, and we are so far behind, it was the logical thing to buy,” said Clark. And if it ain’t broke, don’t fix it. “DB&G will continue to operate as an independent subsidiary of BNSJ. DB&G has a complementary culture and more aligned with what we do at Scotiabank. The business model of DB&G will not change,” said Clark.

Financial analyst and former head of mutual funds at First Global Financial Services, Oliver Chen commented at the time on the Scotia acquisition of DBG that “Interest rates spreads have narrowed and will narrow further, which constrains DB&G profits.” “Based on the movement of the share price (DBG), a lot of players could emerge,” Chen said. “It will be interesting times ahead.”

Some of the obvious candidates, according to Chen, are “the Trinidadian financial companies such as RBTT, Republic Bank, and Clico who are big stakeholders in JMMB. Also, FirstCaribbean International Bank could throw their hat in the ring”.

Well we now know that FirstCaribbean did not throw in their hat, maybe they were waiting for something else maybe they were waiting for Capital and Credit. Ryland Campbell once commented that if the right price was presented to him he would give it serious consideration.

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ANSA McAL Group Announces Formation Of Joint Venture Company, Globus ANSA Private Limited, With Globus Spirits Limited In India.

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A. Norman Sabga Executive Chairman of the ANSA McAL Group of Companies has announced the formation of the joint venture company, Globus ANSA Private Limited, with Globus Spirits Limited in India.

In a release posted on the Trinidad and Tobago Stock Exchange ANSA McAL confirmed that with effect from 4th April 2024, ANSA McAL Limited (“ANSA McAL”) entered into a joint venture agreement with Globus Spirits Limited (“GSL”) to establish Globus ANSA Private Limited (“GAPL”).

Each party will hold fifty percent (50%) of the issued and allotted ordinary share capital of GAPL.

“This collaboration signifies a new era in the Indian alcoholic beverages industry, driving innovation and growth, ‘

“Globus ANSA Private Limited will specialise in manufacturing and distributing alcoholic beverages across the Indian subcontinent, leveraging the strength of both ANSA McAL and Globus Spirits Limited,” said Mr. Shekhar Swarup, Managing Director for Globus Spirits Limited. “This collaboration signifies a new era in the Indian alcoholic beverages industry, driving innovation and growth, ‘he stated

 

 

 

Globus Spirits Ltd is one of the leading players in the Alcohol industry in North India distributing brands in the Consumer Segment including:
• GR8 Times.
• Rajputana.
• Globus Spirits Dry Gin.
• White. Lace.
• Governors’ Reserve Red.
• Governors’ Reserve Blue.
• Oakton.
• Laffaire. Napoleon.

Trinidad and Tobago conglomerate ANSA McAL Group has over 142 years of rich history representing many world-renowned brands, including some of their own home-grown successes. The partnership marks a significant milestone in ANSA McAL Group’s journey, merging cultures and expertise to revolutionise the beer industry in India, with their icon Carib brand and leading the charge.

Norman Sabga Executive Chairman of the ANSA McAL Group of Companies, highlighted the immense opportunities in India and their commitment to delivering unparalleled value through this partnership.

“We are confident that our collaboration will allow us to seize the growing demand for high quality beverages by captivating palates with our distinctive products” he said

ANSA McAL is now poised to be an equal Shareholder of GAPL, an Indian company which
would produce, market, sell, distribute and retail beer and other beverages.

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Statement by Bank of Jamaica Concerning Previous Regulatory Actions Involving Alliance Financial Services Limited

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Bank of Jamaica (BOJ) takes note of the recent Court Decision in the matter involving Alliance Investment Management Limited (AIML), which is not a licensee of the Bank, and public commentary related to the actions taken by the Bank in December 2021 to suspend the cambio and remittance operating licences issued to then AIML-affiliated company Alliance Financial Services Limited (AFSL) effective 3 December 2021. The Bank’s actions also included the revocation of the authorisation granted to AFSL to operate in the Bank of Jamaica Fintech Regulatory Sandbox as a payment service provider effective 3 December 2021.

As stated by the Bank at the time, the regulatory actions became necessary after the Financial Investigations Division (FID) on 2 December 2021 charged AFSL’s principals and two AFSL-affiliated companies at the time (AIML and Alliance Finance Limited (AFL)) with several offences under the Bank of Jamaica Act and the Banking Services Act. Bank of Jamaica is aware that investigations by the FID into the Alliance Group began around 2018. However, it was only after formal charges were laid against the entities and their principals by the FID following the requisite ruling by the Office of the Director of Public Prosecutions, that BOJ took the regulatory action of the suspension of licences to safeguard the financial system. The formal charging of the entities and their principals raised serious “fit and proper” considerations for their continued operation of financial services under the Bank of Jamaica Act and the Banking Services Act.

Alliance Finance Limited subsequently pleaded guilty in the St. Andrew Parish Court to several breaches of the Bank of Jamaica Act and the Banking Services Act and was fined. These breaches for which AFL was convicted related to “Carrying on the Business of Lending in Foreign Currency in breach of the Bank of Jamaica Act” and “Accepting Deposits Without the Requisite Licence in breach of the Banking Services Act.” The breaches involved engaging in economic activities which are regulated and which require an extensive application process, extensive due diligence checks and continuous monitoring throughout the life of the licence in the case of the Banking Services Act. The breaches also involved engaging in the business of lending in foreign currency without the requisite authorisation that allows for review, due diligence and monitoring mechanisms being applied to ensure continued order in the foreign Exchange market. These represent breaches of the substantive framework of financial services regulated by Bank of Jamaica. One consequence of such breaches is being rendered unfit to own and operate financial services in the financial system.

Bank of Jamaica is also aware of legal action initiated in the Supreme Court by the FID related to criminal forfeiture regarding the offences for which AFL was convicted in relation to the Bank of Jamaica Act and the Banking Services Act.

Bank of Jamaica maintains that its actions taken in December 2021 to suspend the cambio and remittance operating licence of AFSL and to revoke the authorisation granted to AFSL to operate in the BOJ Fintech Regulatory Sandbox as a payment service provider, were necessary as the allegations at the time threatened the good order in the foreign exchange market and payment systems as well as the reputation and good standing of the Jamaican financial system internationally. It is important to note that BOJ’s regulatory actions were the subject of judicial review, and finding in the Bank’s favour, the Court of Appeal noted in its 2022 judgment in the matter of Alliance Financial Services Limited v Bank of Jamaica that, “the risk to the financial sector outweighed the economic loss and inconvenience AFSL may suffer as a result of the continuation of the suspension.”

Bank of Jamaica remains committed to fulfilling its mandate to ensure the stability of the Jamaican financial system and the effective and impartial supervision of its licensees.

It is also to be noted that Alliance’s divestment of business was a strategy and activity pursued by the principals of Alliance as their own business decision.

It is also to be noted that Alliance’s divestment of business was a strategy and activity pursued by the principals of Alliance as their own business decision. Bank of Jamaica had no part in that decision or transaction. On 1 April 2022, BOJ publicly advised that AFSL, under a new ownership structure, applied for a cambio and remittance licence, and having satisfied the Bank’s due diligence requirements, was licenced to offer cambio and remittance services at approved locations effective 23 March 2022.

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A.S. BRYDEN Acquires Control Of Stansfeld Scott In Barbados

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A.S. Bryden & Sons Holdings Limited (“A.S. Bryden”) today announced that it has acquired a 55% controlling stake in Stansfeld Scott (Barbados) Limited (“SSB”).

SSB is a leading distributor and retailer of wines, spirits and consumer health products in Barbados. SSB’s products include El Dorado and Plantation rums, Glenfiddich whisky, Stolichnaya vodka, Banrock Station and Lamothe Parrot wines, Twining’s teas, Haliborange vitamins and Endura Malt. In addition to its distribution business, SSB operates six Wine World branded retail stores across Barbados.

P.B. Scott, Chairman of A.S. Bryden

The transaction will allow A.S. Bryden to expand its premium beverage business outside of Trinidad for the first time. Brian Cabral, the outgoing Chairman of SSB, will retain an ownership interest in the Company following the transaction and will remain a director. Stansfeld Scott International, a master distributor of wines and spirits across the Caribbean and Central America which is also owned by Mr. Cabral and his partners,

Jayshree Kessaram and Indra Cabral will not be impacted by this transaction.

In speaking about this development, P.B. Scott, Chairman of A.S. Bryden said, “Brian Cabral, his family and his team have spent decades carefully building Stansfeld Scott into the highest quality wines and spirits distributor and retailer in Barbados. We look forward to joining forces and using A.S. Bryden’s resources to serve Stansfeld Scott’s employees, customers and its principals.”

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Mailpac Group Doubles Size With Acquisition Of myCart Express

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Khary Robinson and Garth Pearce of Norbrook Equity Partners Limited, Mark Gonzales and Samantha Ray of Mailpac, and Kamar Palmer and Aldane Smith of MyCart.

Mailpac Group Limited (“Mailpac Group”), Jamaica’s leader in e-commerce logistics and solutions, announced today that it agreed to acquire MyCart Express (“MyCart”), the fastest growing and second-largest courier company in Jamaica. This strategic transaction not only positions the combined entity as the largest courier platform in the Caribbean delivering over 1.5 million packages annually, but also merges the complementary management, service offerings, and geographic footprint of both entities to deliver superior growth to stakeholders.

After the closing of the transaction, the Board of Directors is expected to convene an extraordinary general meeting of the shareholders to propose that Mailpac Group be rebranded as MyPac Group (“MyPac”) which will operate several independent ecommerce solution-based brands, including Mailpac (premium-service courier), MyCart (value-focused courier), Pack Yuh Barrel (digital barrel packing and shipments), and Mailpac Local (local online shopping). While the management of each brand will remain intact, the Group will be overseen by a management committee made up of Khary Robinson and Garth Pearce of Norbrook Equity Partners Limited (“Norbrook”), Mark Gonzales and Samantha Ray of Mailpac, and Kamar Palmer and Aldane Smith of MyCart.

In addition to doubling the size and capacity of Mailpac Group, the transaction will see the owner operators of MyCart becoming shareholders of the publicly listed company, significantly adding to the innovation and execution capacity of the Group.

“After my first meeting with Aldane and Kamar, I knew they would be excellent partners in this journey of building the region’s leader in ecommerce solutions. Their innate ability to read the market, innovate solutions, and execute, is a perfect match to our proven capacity to deliver operational excellence in growing companies.”

The result of this combination of minds and resources will be revolutionary for consumers and shareholders,” said Khary Robinson, Executive Chairman of Mailpac Group.

The transaction also provides MyCart, its ownership, and its management team with a more seamless pathway to establishing and operating the largest and most trusted courier platform in the Caribbean.

“Our model at MyCart is unique, from customer acquisition to speed of delivery and everything in between. This led to five years of explosive growth, which was great, but also requires established support and resources to avoid certain pitfalls. We believe that Norbrook will give us the right balance of growth support and risk management. With MyPac, we can now continue growing aggressively through continued innovations for consumers but benefitting from the governance and resources of being a publicly listed platform run by proven business leaders,” said Aldane Smith.

In addition to meaningful synergies in various operational areas, Mailpac and MyCart will also get to strategically focus on their core market segments with appropriate services and pricing. “For years we struggled to be everything to everyone, from premium customers wanting a personalized experience all the way to their doorstep, to value-driven customers that just want to collect their packages as fast as possible at the lowest cost. With both brands under one umbrella, Mailpac can now focus on our core differentiators and MyCart can do the same,” said Mark Gonzales, CEO of Mailpac Group.

With conservative synergy estimates, Mailpac Group expects the transaction to deliver significant enhancements in revenue and profitability. Being the market’s second largest player with eight locations and tens of thousands of customers, MyCart brings substantial commercial and economic value to the Group. More importantly, with a robust technology backbone that was created in-house and an expansive warehouse presence in Miami, MyCart is poised to propel the Group in directions and into markets untapped by Mailpac.

“The transaction marks a pivotal moment in the logistics sector, with MyPac poised to lead the way in delivering exceptional courier services across Jamaica and the Caribbean. The combined expertise, resources, and innovative approaches of Mailpac and MyCart create a formidable force that will shape the future of logistics in the region,” said Robinson.

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Tropical Battery Acquires California-Based Rose Batteries

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Tropical Battery Company Limited (JSE:TROPICAL), a leader in innovative energy solutions, is pleased to announce the strategic acquisition of Rose Electronics Distributing Company (Rose Batteries), based in San Jose, California, in the heart of Silicon Valley.

Founded in 1963, Rose Batteries is a manufacturer of specialized batteries for high value industries requiring critical power, including healthcare and aerospace. The company has built a solid reputation for the customized design and assembly of highly reliable batteries providing essential power and charging solutions to a broad range of B2B customers.

The company’s strength lies in its ability to cater to original equipment manufacturers (OEMs), offering customized solutions that supply continuous power in challenging environments. Rose’s approach in providing tailor-made contract manufacturing solutions has redefined industry standards and garnered a loyal customer base supporting stable, recurring revenue streams.

The acquisition of Rose Batteries represents a significant milestone in Tropical Battery’s strategy of diversification into new complementary product lines, market segments and geographies, and reaffirms the company’s commitment to technological innovation and growth in the global energy market. The acquisition was completed through Tropical’s US subsidiary Tropical Battery USA LLC. The purchase price is subject to strict non-disclosure restrictions, however the price significantly exceeds 50% of the market capitalisation of Tropical.

The integration of Rose Batteries into the Tropical Battery group of companies represents much more than simply an expansion into the world’s largest economy; it’s a significant step forward in boosting technological capabilities, innovation potential, and key financial indicators. The acquisition is projected to materially enhance Tropical Battery’s free cash flow, improve its cash conversion cycle, and increase the return on capital, thereby enhancing shareholder value and financial strength.

Rose CEO Itamar Frankenthal, an influential shareholder who has led the company since 2016, will join Tropical Battery as a shareholder and board member, continuing his focus on growth opportunities in the United States. His extensive experience, shaped by his Harvard MBA journey, along with his transformative leadership at Rose, underscores the expertise and visionary approach he will bring to the Tropical Battery group of companies. Rose COO Chris Wunderlich will become the new CEO of Rose Batteries, bringing a rich blend of experience in management, engineering, operations, and technology.

Following the acquisition of Dominican Republic-based KAYA Energy Group in 2023, and now, the acquisition of Rose, Tropical Battery will focus on integrating and harmonizing these three dynamic organizations to leverage synergies, optimize costs, and explore new growth opportunities across various markets.

“This acquisition reaffirms our commitment to transforming Tropical Battery into a multinational organization at the vanguard of innovative growth in emerging segments driving the transition to more sustainable energy solutions,” commented Tropical Battery Managing Director Alexander Melville.

“The integration of Rose Batteries will position the Tropical Battery group of companies to offer even greater value to our customers and stakeholders than ever before. We are reinvigorated by this next chapter in our growth and passionate about enabling a more sustainable, technologically driven future in the energy sector, while strengthening our financial performance with the support of pioneers in the Caribbean financial services ecosystem like Sygnus Capital, which served as lead arranger in this transaction.”

“Sygnus Capital’s partnership with Tropical Battery for this transformative acquisition reinforces our commitment to delivering innovative solutions that drive the growth of medium-sized businesses throughout the Caribbean,” noted Gregory Samuels, Senior Vice President & Head of Investment Banking at Sygnus Capital Limited. “We believe in empowering local companies to acquire overseas assets, thereby boosting our country’s foreign exchange inflows. This move aligns with our focus on impactful and sustainable investments, while also deepening our longstanding relationship with a valued client, namely Tropical Battery’s holding company, Diverze Assets. Together, we pave the way for growth, innovation, and financial resilience in the energy sector,” Samuels added.

About Tropical Battery Company

Established in 1950, Tropical Battery has become a household name in premium energy solutions in the Caribbean. Listed on the Jamaica Stock Exchange in 2020, the company has diversified beyond its core car battery business into automotive care products, renewable energy and electric mobility as part of its transformation into a diversified energy group enabling sustainability with innovation, technology and exceptional service delivery.

About Rose Batteries

With over 60 years in business, Rose Batteries has emerged as a leading contract manufacturer of specialized batteries for high growth industries driving the adoption of cutting-edge technologies. The company’s dedication to innovation and sustainable practices has positioned it as a vital partner across several sectors, including healthcare, robotics, aerospace and telecommunications.

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