Sagicor sees no goodwill loss in Alliance Financial
Published:Thursday | February 10, 2022 | 12:10 AMHuntley Medley/Associate Business Editor
President and CEO of Sagicor Group Jamaica (SGJ), Christopher Zacca, says the financial services conglomerate, which is heavily invested in insurance and banking, sees no loss of goodwill in Alliance Financial Services Limited (AFSL), which it is seeking to acquire, from the current legal imbroglio involving several AFSL affiliate entities and their owners.
Sagicor announced on Wednesday that it had entered into a definitive agreement to purchase all the shares of AFSL in a deal that is subject to due diligence and regulatory approval.
Contacted on Wednesday for comment on the transaction, Zacca told The Gleaner that SGJ was clear that the entity it is seeking to buy has not been charged with any wrongdoing and has had no adverse regulatory findings against it.
“We are comfortable that there is no impact on the goodwill of AFSL,” Zacca said.
He made the distinction that the recent suspension of AFSL’s cambio and remittance licences by the Bank of Jamaica (BOJ) related to charges brought against the company’s principals and affiliated entities and not against the company that Sagicor is moving to buy. He added that Sagicor has already submitted applications to the BOJ for cambio and remittance licences, signalling the commencement of what he described as a multilayered application process.
Zacca said that while the deal rests with the final pronouncement of the regulators, it was the group’s hope that the transaction can be completed “as soon as possible”.
The pending acquisition by Sagicor is intended to give the insurance giant a foothold in the cambio, remittance, and microfinance markets, where it does not now operate.
In late 2020, AFSL reported that it controlled about 8.4 per cent of the remittance business in Jamaica and estimated that it conducted 30 per cent of all MoneyGram inbound transactions with remittance inflows for September 2020 estimated then at US$239.2 million.
For 2021, the BOJ reported total remittance inflows at US$3.5 billion with remittance companies accounting for US$3 billion of this amount. According to AFSL, it also accounted for roughly seven per cent of the almost $4 billion in cambio transactions between January and June 2020.
“The acquisition of AFSL is aligned to the group’s overall strategy for growth as it will allow the company to move into new business segments and expand our product offerings to our clients,” Zacca said in a statement issued to the media on Wednesday.
In December 2020, AFSL launched an initial public offering (IPO) for listing on the Jamaica Stock Exchange seeking to raise $2 billion from the sale of 6.2 billion of its eight billion ordinary shares at a price of $1.59 per share. At the time, it listed its assets as being worth $4.2 billion and annual revenues at $1.47 billion.
The IPO was suspended after regulators were reported to have raised concerns about issues pertaining to one of AFSL’s related companies.
The cambio and remittance licences of AFSL, as well as its ability to operate in BOJ’s regulatory sandbox for financial technology providers, were suspended by the central bank effective December 3, 2021, after criminal charges were brought by the Financial Investigations Division (FID) against its principals and two affiliated companies.
The company was previously licensed to operate five cambios in Kingston, St Catherine, Clarendon, and Manchester. It also operated as a primary provider of MoneyGram remittance service through a network of 68 subagents, including grocery stores, pharmacies, and microloan agencies.
MoneyGram remittance is also offered by Lasco Financial Services Limited, JN Money Services Limited, and VMBS Money Transfer Services Limited.
It is not yet known if Sagicor plans to offer the MoneyGram service using the same network previously built and utilised by AFSL, should it be successful in its application for a remittance licence. It is also not yet known if the Alliance ePay mobile wallet, which AFSL provided through the BOJ sandbox, will be taken on board by Sagicor.
Sagicor is also in the business of real estate, investments, asset management, and retirement planning.
On December 2, 2021, Alliance Investment Management Limited (AIML), Alliance Finance Limited (AFL), along with their president, Peter Chin, and vice-president Robert Chin, were charged with various breaches of the Bank of Jamaica Act, the Banking Services Act, BSA, and the Proceeds of Crime Act stemming from investigations that began in 2018.
Last month, when the matter came up in the St Andrew Parish Court, AFL entered a guilty plea, while indication was given that the case against the Chins in their personal capacity is to be dropped by the prosecution.
Sentencing in relation to the guilty plea was scheduled for March 3 and bail for the Chins extended.