UPDATE: Barita mulls a return to the market
Published:Thursday | November 28, 2024 | 11:46 AM
Barita Investments Limited’s appetite for raising capital continues to grow, enticed by the lowering of interest rates.
“What is also appealing about potentially going back to the market for debt is that it gives us the opportunity to diversify our liabilities side,” said Barita CEO Ramon Small-Ferguson during an investor briefing.
Over the past seven years, Barita has utilised the capital markets to propel its growth elevenfold. It went from a small broker with a net worth of $3 billion in 2018 to an investment banking operation valued at $35.5 billion in 2024.
Over the same time span, Barita’s annual profit has grown from $363 million to $3.9 billion as at September 2024.
Its capital stands at one-third of total assets, well above the minimum regulatory requirement.
“It means there is room for us to potentially grow our leverage, especially in this lower interest rate environment,” said Small-Ferguson.
He said Barita has a three-pronged approach to generating returns: profit margins, asset turnover, and leverage. Of the three, leverage has grown its appeal. The central bank has cut rates three times since August, to the current 6.25 per cent rate, adjustments that are expected to end up reducing the cost of borrowing.
Barita was acquired from Rita Humphries-Lewin by Cornerstone group, which now owns three-quarters of the firm.
Humphries-Lewin sold her majority stake in the company in 2018 for $3 billion and later sold additional shares worth approximately $2 billion in 2021. The second tranche of shares became the focus of a legal dispute brought by Humphries-Lewin’s relatives, who claimed she was incapable of making a rational decision due to dementia. The case was dropped in late October.
“Our stakeholders would have been as invested as we were in this matter. We are happy that this longstanding matter is resolved. And we can be focused on the normal course of business,” Cornerstone Trust & Merchant Bank Limited Acting CEO Dane Brodber said during the investor briefing.
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UPDATE: Story updated with adjustments throughout.