Proven's next acquisition target in transportation sector - To do 'one deal a year'

Proven Investments Limited will seek to acquire another sizeable entity within the Caribbean this year in what would be a new sector for the company, according to group head Christopher Williams.

The company on Friday got regulatory approval from the authorities in St Lucia for its last acquisition, Bank of St Lucia International Limited (BOSLIL), a merchant bank which serves mostly wealthy clients in Panama and Uruguay.

Proven bought 100 per cent of the bank from Eastern Caribbean Financial Holding (ECFH). The cost of the transaction was not disclosed, but Williams suggested it was substantial.

Additionally and concurrently, with the completion of the acquisition, Proven entered into a share-sale agreement with BOSLIL's long-standing CEO Ryan Devaux for him to acquire a 17.18 per cent stake in BOSLIL. Proven will end up owning 82.82 per cent of the merchant bank.

With that deal in the bag, Proven plans to canvas the Caribbean to further develop leads in a number of territories. Williams said Proven remains encouraged not only by the opportunities in the region, but also by the reception.

"We will do one deal a year. That is our target," Williams said, adding that the team likes both the anglophone and the Spanish-speaking Caribbean for investment deals.

Proven is weighing a possible investment in transportation, but declined to give specifics or the location of the deal it hopes to sign off on later this year.

"It is in transportation and it deals with roads and ports infrastructure in order to facilitate the movement of people in the Caribbean," he said.

The company is otherwise looking into leads in the areas of finance, offshore investments and real estate, Williams added.

First in line-up

Last July, Proven indicated a desire to acquire up to three regional entities within the financial and energy sectors. Two of the private equity opportunities were in Haiti and the third in the Eastern Caribbean, it said. The firm planned to spend up at least US$15 million on these acquisitions individually. The BOSLIL deal is the first in that line-up.

"We are very comfortable in this market," he added.

Future deals would be financed with a combination of internal cash and, if necessary, by a new rights issue.

"Our focus is on our return on equity and we feel we will be able to go back to the market if and when we need to. Our balance sheet will continue to evolve around opportunities, as long as it improves the shareholder value for our investors," he said.

Proven Investments Limited, PIL, is listed on the Jamaica Stock Exchange. PIL is managed by Proven Management Limited for which Williams is the chief executive officer. In its seven years of operation, Proven has acquired several assets and launched a real estate arm. The group includes Proven Wealth, Proven REIT, Asset Management Company and Proven Fund Management, all wholly owned; while it controls 49 per cent of Access Financial Services.

Latest purchase

Its latest purchase, Bank of St Lucia International, will be renamed BOSLIL Bank Limited. The merchant bank's former parent company, ECFH, would likely receive an injection of cash from the transaction that should offset losses recorded in the latest financial report on its website.

ECFH recorded a net loss of EC$18.8 million (US$6.96 million) for the first six months of its 2016 financial year, compared with a profit of EC$9.5 million net profit a year earlier. Non-performing loans at a separate subsidiary, Bank of St Lucia Limited (BOSL), affected the group's performance, according to the most recent reporting disclosures. BOSL recorded a net loss of EC$24 million over the period.

"BOSL is a commercial bank in St Lucia, but BOSLIL is an international offshore bank that is not allowed to sell in St Lucia," said Williams. "We bought BOSLIL."

BOSL remains a subsidiary of ECFH, according to a joint release issued on the finalisation of the deal.

Devaux, who assumed the position of CEO of BOSLIL in 2005, will continue to run the bank. The remaining BOSLIL team of 34 staff does not change with the acquisition, and BOSLIL will continue to offer the same international banking services, Williams said.

In their joint statement on Friday, ECFH and Proven confirmed that "all regulatory approvals", including the approval from the Financial Services Regulatory Authority of Saint Lucia, have been granted, and that the completion of the sale and BOSLIL's separation from ECFH was effective at that date, March 10, 2017.

The acquisition, which is Proven's largest to date and its first banking operation, will double the company's balance sheet to US$700 million. BOSLIL has branches in St Lucia, Panama and Uruguay.