Proven testing market currents - Two acquisitions pending, new APO under consideration

Proven Investments Limited has two deals in the pipeline that it plans to finance in part through an additional public offering, APO, of shares on the market.

The APO would be its second attempt at an equity raise, having pulled back an offer earlier this year at the early stage of the outbreak of COVID-19 in Jamaica.

Proven was then aiming for US$50 million from the offer priced at US$0.28, or $38.64, per share in March, a transaction that was then being fully underwritten by Sagicor Investments Jamaica Limited. But the APO was pulled and subscribers reimbursed after the coronavirus began taking its toll and the stock market weakened.

The bank deal that those funds were supposed to finance fell apart, as did other negotiations for another company. But now Proven CEO Christopher Williams says he has other prospects lined up, which will be paid for from the APO funds and the company’s US$100 million of cash holdings.

“We are making good progress with negotiations on two acquisitions – two different ones,” Williams said.

He said other prospects that were lined up for acquisition pre-COVID fell apart because both parties could not agree on price adjustments with the onset of the pandemic.

“So, we now have two new ones and those are moving nicely,” he said.

Both deals will see Proven taking 100 per cent control of the companies, he said. Both businesses are located outside Jamaica but within the Caribbean; one is a financial services firm, while the other is in “the real sector”, but not real estate or construction, and both are medium-sized. That’s as far as Williams would go in identifying the targets.

Proven Investments and its subsidiaries currently operate or provide services in the investment, banking, pension, microfinance, real estate and party promotion sectors.

“Our universe is the English-speaking Caribbean. We try to stay in our universe. That is where we are most comfortable,” he said, regarding the size of the companies. “They are fair-sized entities but not mega-sized. We are still in COVID, and we are not the biggest institution ourselves. So, we have to be prudent,” Williams said.

Proven is still to finalise how big its new APO will be, saying its options are being weighed against a market still negatively impacted by the pandemic.

“We are 75 per cent decided,” said Williams. “The final 25 per cent will be after we select our lead broker and take their advice,” he said.

Sagicor Investments, the lead broker for the first APO in March, ceased taking orders on the second day of subscription, when it was clear that capital markets were being derailed by the pandemic.

Proven will be going back to the regulator, the Financial Services Commission, for approval for the new APO.

“The previous one was closed. So we have to refile,” Williams said, explaining that the March offer was initially suspended, but was then closed without the suspension being lifted.

Williams would not say whether the amount Proven wants to raise in the new offer mirrors or departs significantly from the previous APO.

The company Proven expects to make a determination on the APO by mid-November, but the date of the actual offer is still an open question.

“We haven’t set a date yet and we are going through the process of preparing ourselves,” said Williams. “We are not sure if the market conditions have sufficiently improved. But we are putting the necessary bells and whistles in place to put us in a position to go — if and when we feel market conditions have returned.”

The Jamaica Stock Exchange remains stubbornly in bear territory and is still 27 per cent down year to date across the combined indices.

Still the market performed better in September than in August, with the JSE Combined Index rising by over 10,000 points to 377,515 points over the course of that one month. Within that period, another investment firm, Barita, raised $13.5 billion form stock market investors from an oversubscribed APO.

Proven’s stock price on the more stable JSE US Dollar Index dropped to a low of US$0.18 in May but now trades in the US$0.28 range, which is closer to its one-year high of US$0.35, according to JSE data. The USD Index gained 2.4 points to close at 190 points in September, relative to August’s 188 points.

Proven holds varying levels of ownership in companies across the region, including 20 per cent of JMMB Group, 20 per cent in Dream Entertainment Limited, 27 per cent of Access Financial Services, and 75 per cent of BOSLIL Bank Limited in St Lucia. Additionally, it fully owns Proven Wealth Limited, Real Properties Limited, which operates in Jamaica, and International Financial Planning Limited, based in Cayman Islands and in Jamaica. In January, the company renamed one of its subsidiaries, Proven Fund Managers Limited, as International Financial Planning Jamaica Limited.

steven.jackson@gleanerjm.com