Lee-Chin to acquire bigger stake in Flow parent company
Published:Wednesday | April 24, 2013 | 12:00 AM
Steven Jackson, Business Reporter
Portland Investment Counsel (PIC), an outfit chaired by investor Michael Lee-Chin, plans to acquire additional shareholding in Columbus Communications.
Portland is buying a portion of the holdings of one of the partners in Columbus, the parent company for the regional Flow telecoms network.
Portland is currently a minority partner in Columbus. The deal will not give Portland a controlling stake, Robert Almeida, managing partner of Portland Private Equity, said Tuesday. Rather, PIC will acquire a small shareholding in two companies owned by Columbus majority owner, Canadian John Risley.
The entities include CVBI Holdings (Barbados) Inc and Clearwater Holdings (Barbados) Limited.
"Columbus is valued close to US$1 billion and Risley owns more than 50 per cent of that. He will be indirectly giving up some portion of that, which could be between five to 10 per cent of his holdings," said Almeida on a phone call with Wednesday Business.
Almeida declined to give specifics on Portland's current holdings. It was reported in 2009 that Portland owned some 20 per cent of Columbus, a privately held company.
Portland created a vehicle, Portland CVBI Holdings LP, aimed at wooing select investors - those holding net assets of more than US$1 million for instance - to invest in acquiring the additional shares in Columbus.
INVESTOR PARTICIPATION
"Portland Investment Counsel has created an opportunity for investors to participate in the economic returns of Columbus International Inc through an investment in an indirect minority interest in Columbus International Inc," Almeida said.
Columbus operates in some 25 territories in Latin America and the Caribbean and earned US$194 million in operating profit (EBIDTA) from US$427 million in revenues in 2012, according to a Portland document titled The Power of Telecommunications and Emerging Markets on its home page explaining the deal to investors.
Portland argues that the investment provides a growth potential based on expectations that global IP traffic would increase "threefold over the next five years" and that Internet penetration in the region is nearly half that of the developed world.
"Columbus Networks' strategy is to continue to extend its subsea business to reach new countries in the region while continuously investing in in-country back-haul to extend its network from the shoreline into major city centres, thereby sourcing new high-margin revenue streams and creating significant barriers to entry," stated the Portland document regarding the US$950-million replacement value of the network.
Columbus was founded in 2004 by Risley, Lee-Chin and Brendan Paddick, who is the president and chief executive of Columbus.
The Portland document did not disclose the specific shareholdings held by Risley. However, it did disclose the relationship.
"CVBI is owned by CFFI Ventures (Barbados) Inc, and CHBL is owned by Clearwater Fine Foods Incorporated. CFFI Ventures (Barbados) Inc and Clearwater Fine Foods Incorporated are controlled, directly or indirectly by John Risley," it said.
Almeida emphasised that Portland was not seeking controlling interest in the telecom group.
"Portland Investment Counsel is not seeking to acquire all of Columbus Communications Inc's operations in some 25 counties. Nor is the current controlling shareholder seeking to sell the controlling interest of Columbus Communications Inc," he said.
He avoided comment on the size of Portland's stake after the acquisition deal.
Portland Private Equity earlier this year announced plans to raise US$300 million (J$30b) to finance a series of regional undisclosed investments.
These transactions are slated to occur this year via its Caribbean Fund, according to disclosures by the Inter national Finance Corporation (IFC), which is among the targeted backers of the fund.
Almeida said the activities of the fund are separate from the current investment opportunity with Columbus.
Local investments made by Portland include National Commercial Bank Jamaica and Advantage General Insurance.
"Wealth is created by transforming an inefficient entity to one that is efficient. Likewise, countries that are going through transformation from inefficiency to efficiency (developing countries) can provide an opportunity for wealth creation," said the Portland document.