Highlights of the 2021 T&T Exchange | Local company

For the year through December 24, the T&T Stock Exchange Composite Index rose 12.18 percent, led by the All T&T Index, which had risen 16.18 percent during the period.

In this quick review, Anthony Wilson, editor-in-chief of Express Business, takes a look at some of the year’s equity highlights.

Massive

The major transaction for Massy Holdings Ltd in 2021 was the sale of Massy United Insurance Ltd to the Coralisle Group, a multi-branch insurance company headquartered in Bermuda.

The sale of 100% of the insurance company was disclosed on September 7, 2021 and the agreed consideration is $ 90.5 million, or approximately $ 606 million.

In the notice to shareholders, Massy revealed that in fiscal 2020, Massy United Insurance generated revenue of $ 536.8 million ($ 80.1 million) with pre-tax profit. of $ 41.3 million ($ 6.2 million).

In an interview published in the Dec. 22 edition of Express Business, Massy Holdings CEO Gervase Warner said the group had entered a divestiture process after a strategic exercise in 2018 revealed that 48% of the group’s operating assets at an enterprise level were producing returns below the group’s weighted average cost of capital (WACC).

The group has decided to focus on its three main portfolios – integrated retail, engines and machinery and gas products – while seeking to divest its non-core and underperforming assets.

Between 2019 and 2021, Massy sold 15 assets, not all of them underperforming, for a total of $ 125.41 million. (See table)

The divestment strategy resulted in a war chest of around $ 90 million, until the interview day on December 17, which Warner admitted could be deployed for strategic acquisitions in the future.

Massy Holdings stock rose 72.13% for the year through December 24, 2021, from $ 60.99 at the end of December 2020 to $ 104.98 last Friday.

Massy’s share price may have been affected by news, announced on May 9, 2021, that the company intended to list its shares on the Jamaica Stock Exchange. The company’s share price rose 61.5% from May 10 to December 24.

Massy’s after-tax profit for its fiscal year ended September 30, 2021 increased 10.6% to $ 822 million, from $ 743.15 million in 2020.

ANSA McAL

Massy’s divestment strategy means the company has a surplus of US dollars on its balance sheet to make acquisitions that require foreign currency.

This is not the position ANSA McAL finds herself in.

In its chairman’s statement in the group’s 2020 annual report, A Norman Sabga said that the availability and price of hard currency “remains one of the biggest risks affecting the group’s ability to grow and manage the business. increased input costs “.

Sabga said ANSA McAL Group faces significant constraints in securing US currency to Barbados and T&T.

“We have the currency (in T&T dollars) to do almost any transaction or acquisition, but the challenges of buying foreign currency have forced us to borrow and have increased the cost of doing business …

“In addition, although our leverage is low, the repayment of hard currency loans is also affected by the unavailability of hard currencies. “

Despite the problems related to the availability of hard currencies, the ANSA McAL group announced the acquisition of Bank of Baroda on February 26, 2021.

The acquisition was carried out by the ANSA Merchant Bank group and allows the ANSA McAL group “to enter the landscape of commercial banking for the first time”. ANSA McAL owns 82.5% of its subsidiary ANSA Merchant Bank, which is listed on the T&T stock exchange.

Sabga also said, “We also continued to build a significant free cash balance of over $ 1 billion to position ourselves to exploit attractive growth opportunities, as evidenced by our recent acquisition of Bank of Baroda. (T&T), now renamed ANSA Bank. Ltd.

“Against this backdrop, we optimistically look to emerge from the global pandemic in an even stronger position,” Sabga said.

In an announcement on December 2, 2021, ANSA Merchant Bank revealed that it had signed a lock-up agreement on November 25, 2021 with CL Financial to acquire that group’s 94.24% stake in Colfire, one of the leaders of non-life insurance. companies in T&T.

CL Financial’s liquidators, Grant Thornton, accepted an offer from ANSA Merchant Bank of $ 20.32 per share for the 14,843,911 shares of CL Financial for a total consideration of $ 301,628,271.52.

The acquisition of Colfire was conditional on granting minority shareholders of the insurance company the right to bid on the shares held by CL Financial. The pre-emption right period ended on December 23 at 5 p.m. without any counter-offer being made, sources familiar with the transaction said.

ANSA McAL’s after-tax profit for the nine months ending September 30, 2021 was $ 335.15 million, an increase of 41% from the $ 237.60 million earned by the company over the past nine first months of 2020. Group revenue fell 2.47 percent to $ 4.13 billion.

Until Friday, December 24, ANSA McAL’s share price had risen 11.20% for the year to $ 59.49 from $ 53.50 on December 31, 2020.

First citizens

On March 3, 2021, the board of directors of First Citizens Bank Ltd made a decision to enter into a purchase and sale agreement with the Bank of Nova Scotia to purchase its operations in Guyana, subject to regulatory approvals and usual closing conditions.

More than nine months later, the predominantly state-owned bank has had little to say about acquiring banking operations in a country poised to experience explosive demand for loans from its population in due to the influx of multiple ExxonMobil oil dollars discovered off Guyana.

While the attention of First Citizens management may have been focused elsewhere in the Caribbean, Finance Minister Colm Imbert announced in his 2022 Budget speech that the government intends to cede 10 869,565 bank shares with the aim of raising $ 550 million.

This sale, through First Citizens Holdings Ltd, the entity that owns the state’s 64.43% stake in the bank (or 161,946,890 shares), would reduce the state’s stake after completion to 151,077,325 shares or 60.10% of the issued shares. This sale is expected to take place in 2022.

The first citizens increased by 35.56% between the start and 2021 until December 24.

Bank of the Republic

Next year, a decision will also be made on what the government intends to do with the CLICO Investment Fund (CIF) and the 40 million Republic Bank shares held by CIF, which represents approximately 25 percent of Republic Financial Holdings Ltd (RFHL).

The CIF ends in 2022 and the official fund redemption date is January 2, 2023 or the occurrence of a special transaction.

According to the trust deed that established the CIF, upon redemption, the trustee will distribute the RBL shares, all other assets including the deposited property and all monies held to unitholders. The exchange of Republic Bank shares would be around five CIF units for one RFHL share.

In other words, if the government does nothing, a quarter of the largest bank in the English-speaking Caribbean would be distributed to CIF unitholders.

If the government is to keep CIF’s RFHL shares, it must make an offer to unitholders that would be better than owning Republic.