FGFS changes strategy - Takes aim at retail clients
Published:Wednesday | November 6, 2013 | 12:00 AM
Marcella Scarlett, Business Reporter
First Global Financial Services (FGFS), in the past six months, has structured and placed several debt securities on behalf of two corporate clients, as well as its parent and affiliated companies.
FGFS is also trying to deepen the pool of investors to be tapped as prospective participants in private placements, according to the company's new president, Steven Whittingham.
The stepped-up activity is all part of the plan to reshape FGFS' client base and raise its profile among the investor class in a market in which it has about a five per cent share.
"Right now, FGFS is not on the top of the minds of majority of retail investors," said Whittingham. "On the other hand, the company is more visible to corporate and institutional clients and we plan to do something about that," he said.
Whittingham was hired by GraceKennedy in May to replace Robert Drummond.
"Introducing a new president is the start of the process to improve our visibility," said Courtney Campbell, chief executive officer of GK Financial Group, under which the First Global businesses fall.
"We have some ambitions and we will be looking to introduce new products, new services, improve the ones we already have and looking at going into new markets," he said.
FGFS will also be ramping up its mass marketing strategy, Campbell said.
Product innovation and development
Whittingham said that under his management, FGFS would focus on driving business to the firm through product innovation and development.
"For starters, we have quietly issued over J$1 billion in securities in the last six months and we have several deals in the pipeline that we are working on," he said.
"These are securities we issue to our retail clients since the Government has stepped back as a creator of securities. We have stepped up in our own way," he said.
The company has structured financing for Doreen Frankson's EdgeChem, as well as Unicomer Jamaica to refurbish the Courts flagship store on Constant Spring Road, in addition to refinancing the entire furniture business from US dollars, said the FGFS president.
FGFS has also handled placements on behalf of ultimate parent, GraceKennedy Limited, and some of its subsidiaries.
"We are issuing short-term commercial papers for our corporate clients that retail clients can invest in," said Whittingham. "We have issued papers raising funds that are to be used as working capital."
Additionally, FGFS is devising new products for retail investors, including "fixed currency savings for them based primarily on ease of access through the online banking platform from the bank", he said, referring to commercial banking affiliate, First Global Bank.
"We are not as large as many of the other players, but one of the key things we are trying to do is become a market maker," Whittingham said.
FGFS says it has J$30 billion of pension funds and other assets held on behalf of retail clients under management — a small slice of the market which in June had 32 players with J$716 billion of funds under management — and manages another J$20 billion of balance sheet assets that include its repo portfolio, the company said.
Whittingham said FGFS, through the corporate debt placements, is trying to fill the gap created by the absence of new GOJ bond issues in the market.
The securities issued in the past six months were structured with six to 18-month tenures, which means liquidity is not a primary concern, he said. However, if investors want out of the bonds before maturity, FGFS will facilitate the transactions, he said.
Campbell said many of the smaller retail/personal clients will not be able to participate in the private placements, but that several options were available: CI mutual funds as well as stockbrokerage and portfolio management services.
Whittingham adds that while repos are still available, direct and outright ownership of the securities is strongly encouraged.
Rather than expanding the branch network, FGFS' growth plan is to be facilitated by technology — especially Global Access, the online banking platform offered by First Global Bank.
"Right now, we have two products that will allow people to invest in hard currency. They are savings product where a fixed amount will be withdrawn from clients accounts monthly," said Whittingham
One of the structured fixed income products is designed for retirees, and the other for education, he said. Both will be available to investors starting next month.
He said the distinguishing feature about these two products is that they are structured as investments in a pool of funds.
"It is an investment that invests in a mutual fund, so it will consist of several mutual funds," Whittingham said.